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March 24, 2015

2015 U.S. Crop Acreage - 89 mac of Corn and 85-86 mac of Soybeans

On March 31st we will get the USDA's official Prospective Planting Report for the 2015 growing season in the United States. Until then, there will be numerous private estimates speculating as to the acreage mix this summer. Below is my 2015 acreage estimate and the various factors that could impact farmers planting decisions.

It is very early to speculate as to the potential acreage in the U.S. but as of now, I am anticipating that the 2015 U.S. corn acreage will be 89.0 million acres or 1.6 million less than in 2014. For soybeans, I am anticipating that U.S. farmers will plant 85-86 million acres or 1.3 to 2.3 million more than in 2014. Below I have listed numerous factors that could influence the acreage mix before the planting is completed in early summer.

Dry soils in western Corn Belt could result in an early start to spring planting - Over the last 30 days, the rainfall totals in Iowa, Nebraska, Minnesota, and the Dakotas has generally been less than one half inch. There was some snow in the region over the weekend and temperatures have turned cooler again, but I don't think it changed the overall pattern. As a result of the dryer conditions, the frost can come out of the ground faster and the soils can warm up faster compared to when the soils are saturated. Some early spring fieldwork is already underway in areas of the western Corn Belt including: spring tillage, fertilizer application, and small grain planting.

Generally, when the corn planting gets underway early as it appears it might occur this year, farmers tend to plant more corn than originally anticipated. Many farmers are now more adaptive than in the past and they will watch for market signals before they make their final planting decisions. Some farmers order extra corn and soybean seed for the purpose of allowing them to adjust some of their acreage at the last minute based on market signals.

Dry soils could be long term concern - While dryness in the spring is good for early planting progress, the subsoil moisture needs to be recharged before the critical summer months arrive. For example, 80% of Minnesota is classified as in a moderate drought and much of the Dakotas and Nebraska are classified as abnormally dry. While that might sound alarming, we must remember that it is still March and the situation could return to normal with several good rain episodes this spring. Dryness in the spring is generally good because it allows for early planting progress. It can turn from a positive to a negative though if the dryness extends into the summer when crops rely on subsoil moisture.

Wetness in Delta and mid-South could influence acreage mix - In the Delta and the mid-South it has been too wet this spring and they received more rain over the weekend. Corn is the first crop planted in this region and it appears the corn planting will be delayed this spring. If the corn planting continues to be delayed, farmers could switch some of their intended corn acreage to soybeans instead. Additionally, the cotton acreage in the Delta is expected to decline and since cotton is generally irrigated, it was assumed that some of those cotton acres would be switched to corn which is generally irrigated as well in the Delta. If the corn planting continues to be delayed by wet weather, then maybe some of the corn and cotton acreage could be switched over to soybeans.

Wetness in the eastern Corn Belt - While most of the western Corn Belt has generally been dry thus far this spring, that has not been the case in the Ohio River Valley including southern Illinois, southern Indiana, and much of Ohio. These southern and eastern areas have been quite wet so it probably will not be an early start to spring fieldwork in those areas. I think it is way too early to speculate about potential acreage shift in these areas and I wouldn't even consider the possibility of acreage adjustments unless it stayed wet for about another month or so.

Market signals - Farmers today are very much in tune to what the market tells them to do and right now the price ratio between corn and soybeans is generally neutral although it has been trending more in favor of corn in recent weeks. The Prospective Planting Report itself can also influence planting decisions. The USDA surprised the market in their Outlook Conference in February by estimating that the 2015 U.S. soybean acreage would decline by 200,000 acres. The market generally discounted that estimate and there is almost a unanimous opinion in the market that soybean acreage will increase in 2015, it's just a matter of how much. The USDA may surprise the market again in their Prospective Planting Report - stay tuned.