Corn and soybean acreage will shift across the U.S. in the spring of 2024, but perhaps not by as much as what market prices are currently forecasting.

The Farm Futures January 2024 grower survey, conducted via email Dec. 18, 2023 through Jan. 2, 2024, gathered acreage intentions for this spring from 825 respondents across the Heartland. Despite the market indicating a strong preference for soybean acres this upcoming spring, farmers are indicating only slight changes in corn and soybean acres.

2024 corn outlook

Farmers indicated 2024 corn plantings would dip nearly 2%, or 1.8 million acres, from year ago sowings to 92.8 million acres this spring. Rotations are expected to remain consistent throughout the Corn Belt, but bigger losses are expected outside of that region, particularly in areas where fall 2023 fertilizer prices may have been more expensive and/or less available.

Barring any weather hiccups, USDA projects 2024 trendline corn yields at 181.0 bushels per acre. Using that calculation, U.S. corn farmers could harvest 15.238 billion bushels of corn this fall, down less than a percent from last year’s record-setting crop of 15.342 billion bushels.

The 2023 U.S. corn harvest provided the market with more supply liquidity than it had experienced since China’s grain buying spree in 2020. But without significant upticks in domestic and global usage rates of U.S. corn, farmers could face further price falls as supplies grow.

Related:Farmer survey points to higher 2023 corn yields

December 2024 corn prices fell 17% during the 2023 calendar year as record-breaking U.S. and Brazilian corn crops flooded the world with plentiful exportable corn supplies. Thanks to more affordable inputs in the U.S. last fall, many growers were hesitant to back away from regular corn rotations even as domestic usage of soybeans continues to rise.

In the first three weeks of the 2024 calendar year, December 2024 corn prices are already trading 5% below where they started the new year following the news of surplus U.S. stocks. Markets are waiting for further price direction from Brazil, where a late-planted soybean crop and early season drought could limit acreage and provide more profit opportunities for U.S. corn growers this spring.

Soybean boom or bust?

Growers in the Farm Futures survey expect to plant 85.0 million acres of soybeans this spring, up 1.4 million acres, or 1.6%, from a year ago. It would be the fifth-largest soybean crop planted in the U.S. if realized.

Using USDA’s trendline yield of 52 bpa, 2024 U.S. soybean production would rise nearly 5% on the year to 4.361 billion bushels – the country’s fourth-largest soybean crop. Most of the acreage will likely come from expected rotation shifts within the Corn Belt, as well as larger shifts from outside the region. Specifically, growers in North Dakota, where the ADM Spiritwood plant came online last fall, are projecting a 5% increase in planted soybean acreage this spring.

But amid growing soy crush usage for renewable diesel supplies, why isn’t the expected soybean acreage shift more significant this year? Farmers – particularly those in the heart of the Corn Belt – aren’t willing to jump out in front of the anticipated renewable demand boom, perhaps having learned that tough lesson in the early days of ethanol expansion.

Instead, farmers are waiting for the demand to come to them first while also weighing outside pressures. The added competition from South America will weigh heavily on prices in the coming months. Argentina could more than double its corn and soybean production forecasts from last year, as a La Niña-induced drought has been virtually eliminated by El Niño rains in recent months.

Most importantly, Brazil is expected to harvest another large soybean crop, even with some early season hiccups. This is likely the single-most important factor preventing more acres from switching to soybeans in 2024, as November 2024 soybean prices fell 12% during the 2023 calendar year on the robust Brazilian harvest.

Corn vs. soybean tradeoffs

The widely referenced new crop price ratio, which projects acreage expectations by dividing November 2024 soybean futures prices by December 2024 corn futures prices – the new crop contracts for both crops – determines the price favorability of each crop.

For reference, the point at which the market can change direction from corn to soybean acres is at 2.40. A price ratio above 2.50 is a clear market preference for soybeans, while a reading below 2.30 expresses a strong market desire for corn acres.

The new crop price ratio was trading flat at 2.50 through mid-January – a strong market preference for soybeans. Indeed, U.S. soybean stocks will end the 2023/24 marketing year at the 17th-tightest level on record, so the demand side of the balance sheet offers farmers more profit opportunities this spring.

Through the first three weeks of January 2024, both new crop futures contracts for corn and soybeans have lost 5% of their value. Without more positive news on the demand front for both commodities, markets could lose interest in corn and soybean acreage jockeying, especially if Brazil’s safrinha corn crop comes out swinging.

The wheat wrinkle

USDA published its 2024 winter wheat sowings report in early January, finding a 6% annual decline in winter wheat acres, bringing expected acreage down to 34.4 million acres – the 10^th-smallest winter wheat acreage on record.

But Farm Futures survey respondents offered a differing opinion to USDA data. Readers reported a 1.5% increase in annual winter wheat sowings, driving expected 2024 acreage up to 37.3 million acres.

It’s not impossible that USDA will find more winter wheat acres in future reports. Over the last 10 years, more winter wheat acres were found by the end of the growing season relative to early readings in six years with an average increase of 654,000 acres in those years.

The most notable acreage gains in our survey were reported from hard red winter wheat growers in Kansas and Oklahoma, as well as some soft red winter wheat producers in Illinois and Missouri. About 36% of respondents cited soil moisture as a critical consideration for 2024 wheat production, with the aforementioned areas likely benefiting from a series of snowstorms early in 2024.

Surprisingly, survey respondents expect to plant over 19% fewer spring wheat acres this year, dropping the 2024 total to 9.1 million acres. If realized, it would be the sixth-smallest spring wheat acreage planted and the smallest spring wheat acreage since 1970.

But there is likely some farmer hedging happening here. It seems likely that if soybean prices regain some strength in the coming weeks, more acres in North Dakota will be diverted into soybeans instead of spring wheat.

Soil moisture in the Northern Plains will also be an important consideration this spring. If soybean prices don’t change significantly over the next month or two and El Niño brings more snow into the region, farmers may be more likely to plant more spring wheat.

Survey participants did not report a significant change in durum wheat acres, which are expected to remain unchanged at 2023’s total of 3.3 million acres for the upcoming growing season.

In total, Farm Futures readers are expecting 2024 U.S. wheat acreage to dip over 3% from last year to just shy of 48.0 million acres. July 2024 (new crop) contracts for all three major wheat varieties fell between 19% and 25% in value during 2023, so it should come as no surprise that wheat acres will dip this year.

If normal weather conditions return to the Plains, USDA expects trendline yields for 2024 to reach 49.5 bpa, bringing the size of the 2024 wheat crop to 1.887 billion bushels – a 4% increase from last year’s harvest.

Price implications

Even though corn acres are forecast to be slightly lower this spring, it seems unlikely that the problem of high supplies will go away for corn prices following the harvest of the 2024 crop, which will be the second-largest crop on record. Using just a 1% increase in annual usage rates in 2024/25 from the current marketing year, corn ending stocks will grow to 2.725 billion bushels, assuming trendline yields.

If realized, that would be the largest absolute ending stock volume for U.S. corn since the late 1980s. Ending stocks-to-use ratios would rise from 14.8% in 2023/24 to 18.5% - the largest supply environment for corn since the 2000/01 marketing year.

Larger supplies could open the door to more export opportunities, which could in turn draw down stocks and lend some price support. But prices are likely to continue trending lower until that happens if farmers do indeed plant 92.3 million acres of corn this spring. The bigger supplies are a bearish omen for corn markets.

Soybeans are facing the opposite demand problems than their corn counterparts. Expectations for rising soy crush demand to keep renewable diesel pipelines humming into the next couple years mean that any extra bushels produced by the 85.0 million acres of soybeans Farm Futures growers expect to plant this spring will be quickly used up.

In fact, expected 2024 harvested soybean supplies will continue to fall short of usage expectations for the third consecutive marketing year, which will draw down soybean supplies in 2024/25 from their current levels.

The 2024/25 STU for U.S. soybean supplies would tighten to 5.8%, down 0.9% from the current marketing year. It would be the twelfth-tightest ending soybean supply in U.S. history, similar to soybean supply scenarios in the 2020/21 marketing year.

The growing domestic usage rates could offset export market volatility in 2024/25, especially as Brazil continues to expand its dominance of the global soybean export market. But the rising usage rates and relatively flat acreage growth could create more profit opportunities for soybeans in the coming years than corn counterparts.

Farm Futures readers expect to see a slight uptick in wheat acreage, and the resulting production bump – barring any unforeseen weather events – will help replenish the U.S.’s wheat pipeline. USDA’s baseline estimates, published last fall, were used to forecast 2024/25 domestic wheat usage. Those estimates run nearly 4% higher than current marketing year consumption rates but may allow for more liquidity with the higher supply availability.

Using an annual usage estimate of 1.948 billion bushels for 2024/25 wheat, new crop ending stocks will rise to nearly 707 million bushels. 2024/25 STU will rise from 34.5% currently to 36.3% on the added supplies.

Given the current usage challenges facing 2023/24 wheat consumption, the expectations for such a significant rebound in demand in 2024/25 may be optimistic. But a return to normal production conditions also favors a revival in export volumes next year, after this year’s shipments are expected to drop to the smallest level since the 1971/72 marketing year – just before the Great Soviet Grain Robbery.

The higher supply situation for wheat means that prices are likely to continue to fall, especially for Chicago soft red winter and Kansas City hard red winter futures contracts. But if export demand is renewed and if spring wheat acres in North Dakota are reshuffled into soybean acres later this spring, we could see some interesting price dynamics play out in the wheat market in 2024.

Bearish winds ahead?

Farm Futures’ 2024 acreage estimates for all three principal crops total 225.7 million acres. If realized, that would be the 13^th-largest principal acreage mix in U.S. history, comparable to supply scenarios in the late 2010s when supplies were plentiful.

For corn and wheat, domestic supplies are estimated to grow at current demand levels, which would be bearish for prices. Growing soybean usage will put a bigger crop to good use but could still tighten 2024/25 ending stocks and provide a price floor for soybean futures beyond the 2024 growing season.

Ag prices suffered in 2023, coming down from record heights as inflation eased, supply chain headaches lessened, and more global production helped to reduce global stock concerns. It seems likely that trend will continue in 2024, especially if El Niño weather conditions both at home and abroad continue to favor crop development in the coming months.