April 6, 2016
U.S. Corn Acreage may be lower than Prospective Plantings Report
In the Prospective Plantings Report released last Thursday by the USDA, they estimated the 2016 U.S. corn acreage at 93.6 million acres. That was much higher than the market had anticipated and even higher than the 92 to 93 million acres that I had been expecting. I view the 93.6 million acres of corn as probably the highest number of the year and I think it will decline from that level. Conversely, I view the 82.2 million acres of soybeans as probably the lowest number of the year and that it will increase going forward.
The Corn Belt states are expected to have the biggest chunk of increased corn acres in 2016, but the biggest percentage increases came from the fringe areas. In the heart of the Corn Belt, the corn acreage increase was 0 to 3%, while in the fringe areas, it was much higher in the range of 10% to as much as 80% higher. The ten states with the greatest percentage increases in corn acreage were: Louisiana (183%), Arkansas (172%), Mississippi (157%), Alabama (131%), North Dakota (124%), Georgia (118%), North Carolina (118%), Kansas (116%), Missouri (111%), and South Carolina (108%).
If you look at the Delta and Southeastern states of Louisiana, Mississippi, Arkansas, Alabama, Georgia, and South Carolina their combined corn acreage went from 2,255,000 acres in 2015 to 3,370,000 acres in 2016 or an increase of 1,110,000 acres.
Many of these southern areas are very wet and the window for corn planting will soon be closed. Unfortunately, the Weekly Crop Progress report scheduled for release on Monday, April 4 has been delayed one day until Tuesday, April 5. When we get the report on Tuesday, it will probably show continued delayed corn planting in the Delta and the Southeastern U.S.
Where the farmers have already done their field work ahead of planting, the majority of the corn will be planted unless there is another batch of wet weather. In the areas where there was more extensive flooding and saturated conditions and the famers have not been able to get much field work completed, some of the intended corn acres may be switched to soybeans or cotton. Mid-April is going to be the important decision time for southern producers. If they don't get their corn planted by that date, they may have to switch to another crop.
Potential 2016 U.S. corn acreage 92-93 million acres - After the Prospective Plantings Report was issued last week, the price ratio between corn and soybeans now looks a little more favorable for soybeans. As I mentioned, I think it will be difficult to get all the intended corn planted in a timely fashion in the Delta, the Southeastern U.S., the mid-South, and maybe even in the eastern Corn Belt. Combining some potential corn planting delays with improved price prospects for soybeans, I am going to estimate the 2015 U.S. corn acreage at 92-93 million acres.
Potential 2016 U.S. soybean acreage 83.0 million acres - After the release of the report, the price prospects for soybeans now look better. If we lose some corn acres, then I think we will gain some potential soybean acres. So instead of the 82.2 million acres estimated in the Prospective Plantings Report, I think it may end up closer to 83.0 million acres. This is just a guess of course, and the soybean acreage will be determined by what happens with the corn planting.
Potential 2016 U.S. Corn Yields 163-164-165 bu/ac - I know, it is way too early to even mention potential corn yields, but a lot of potential corn acres are being added in low yielding environments. The USDA estimated that there will be an increase of 5.6 million acres of corn in 2016. Approximately 2.5 million of those acres will be in what would be considered fringe areas where the corn yields tends to be on the low end of the national average. Some of those acres may not all get planted as I mentioned earlier, but there will be more corn in the somewhat lower yielding environments.
Therefore, I think we should be a little more conservative on the potential corn yield. There has been a lot of talk of corn yields in the upper 160's bu/ac, but I think we should reduce that a little to maybe 163-164-165 bu/ac just due to the increase acreage in the lower yielding environments.