Crops > Outlook & Prices > Outlook & Prices
July 2022
The acreage debate is still not settled
Normally, the June acreage report provides the final numbers for plantings in a given year. But 2022 is not a normal year. While the drought of last year has continued into this year, spring rains were long enough and strong enough to create some significant planting delays. Those delays led producers to partially reverse the changes anticipated from the March planting intentions. In March, farmers across the country indicated they would plant a record amount of soybeans, while reducing corn area to avoid high input costs. Following the planting delays and the great rush to plant in May, USDA’s June survey found the reduction in corn was smaller than expected. But the planting delays also translated into a much smaller increase in soybean area. Corn gained 400,000 acres from the March intentions, while soybeans lost 2.7 million acres from March. The shifts put corn back on top in terms of total area (89.9 million versus 88.3 million).
The largest changes were in the Dakotas (especially North Dakota), but there were significant shifts across the country. Figure 1 shows the changes in corn area relative to the March intentions. States in blue planted more corn than the March intentions, states in red planted less, and states in gray planted roughly the intended amount. North and South Dakota dropped area (600,000 and 300,000 acres respectively), but that was more than offset by gains from Iowa (100,000), Missouri (100,000), Minnesota (500,000), and Wisconsin (300,000). Given USDA’s June national corn yield estimate of 177 bushels per acre, the additional 400,000 acres translates to an additional 265 million bushels of corn for the market to absorb.
Figure 2 displays the acreage shifts for soybeans, with the same color coding. As the map shows, the reductions in soybean area cover a wide swath of the country, but it was the Northern Plains where the bulk of the losses occurred. North Dakota gave up 1.1 million acres, Minnesota lost 500,000 acres, and South Dakota dropped 200,000 acres. The only major state to add soybean area was Illinois, bringing on an additional 200,000 acres. Despite the overall losses, Illinois, Kentucky, and Wisconsin set state records for soybean plantings. The decrease of 2.7 million acres from the March intentions lowers expected soybean production by 138 million bushels. Barring any other changes, this would reduce 2022-23 ending stocks below 150 million bushels. So expect some adjustments to soybean usage in the July World Agricultural Supply and Demand Estimates (WASDE) report to avoid setting soybean ending stocks that low.
While these changes were dramatic, the largest surprise in the June Acreage report was the note that nearly 20 million acres nationwide were still to be planted after mid-June, with roughly 4 million headed to corn and 15.8 million destined for soybeans. Given the sheer size of this late planting push, USDA will be gathering additional acreage information in the most delayed states (Minnesota, North Dakota, and South Dakota) through July. If further acreage adjustments are warranted, they will be published in the August Crop Production report and incorporated into the August WASDE tables. So stay tuned, we may not know the planting numbers until combines are preparing to roll.
The delays in planting also impacted the timing of crop ratings. Both the corn and soybean crop condition ratings were delayed a week at the start of the growing season, reflecting the planting problems. Figures 3 and 4 show the historical patterns for the national crop ratings, the most recent 5-year average ratings, and the ratings for last year’s and this year’s crops. For corn, the late start didn’t negatively impact the crop rating, as this year’s crop started with over 70% of the crop rated "Good" to "Excellent". Up until the 4th of July, this year’s crop was rated better than the 5-year average and last year’s crop. But in the most recent look, the percentage of the crop rated Good to Excellent slipped below the 5-year average and is tied with last year. The general trend in the ratings is for the Good to Excellent percentage to slowly decline over the growing season. This year’s crop has seen a quicker downgrade as dry conditions rebuild around the Corn Belt. And while recent storms have brought beneficial moisture, strong wind events, such as the July 5th derecho across South Dakota and Iowa, may provide additional reasons for continued erosion of the corn ratings. I watch these ratings somewhat closely as the ratings do provide a decent signal on projecting the national corn yield. Based on the historical relationship between the rating and final yields, the current rating suggests USDA’s current yield estimate (177 bushels per acre) may be a bushel too high. And any additional drops in the ratings would push the yield estimate lower.
The national soybean ratings have followed much closer to the 5-year average, and this year’s crop is still rated above last year’s. For soybeans, the percentage of the crop rated Good to Excellent tends to stabilize in early July, holding around 62%. If this year’s crop continues to follow the 5-year average, the historical relationship between the ratings and the national yield suggests that, like with corn, the current USDA yield estimate (51.5 bushels per acre) is a bushel too high.
With the seasonal drought outlook expanding drought conditions up along the Mississippi River valley from Louisiana to Illinois, it is likely the crops ratings will decline. That should create a floor for crop prices as the summer progresses, preventing a complete loss of the price gains since the beginning of the year. Over the last couple of weeks, corn and soybean prices have fallen sizably as concerns about inflation and recession have sent institutional investors in retreat. In most crop markets, the recent price decline has basically reset prices back to the levels they were just before the start of the Ukrainian war, which was already approximately 15% above price levels at the beginning of the year. So even with the recent setbacks, crop and soybean prices are still at strong levels. And weather conditions still have the potential to send them higher once again.
Listen to the most recent Crop Market Outlook video for further insight on outlook for this month.
Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu
