USDA Tops Expectations on Corn Acreage Estimate, Disappoints on Soybeans

The USDA Prospective Plantings report for 2023 showed year-over-year jumps in corn and wheat acreage that exceeded market expectations, while soybean area was less than expected.  

Meanwhile, the USDA’s Quarterly Stocks report showed a 12.8% slump in soybean stocks versus a year earlier, supporting the notion that old-crop soybean ending stocks for 2022/23 remain on track for their lowest finish in at least six years. Corn stocks were down 4.6% year over year and wheat supplies were pegged 8% lower.

A perfect growing season will be necessary for US agriculture over the next six months to restock domestic supplies and help ease the inflationary pressures that have been battering the global economy over the past few years. 

High planted acreage is the first requirement to increase US supplies in 2023/24. Farmers intend to plant a combined 179.5 million acres of corn and soybeans, up 2% from last year. Corn planted area is expected to increase 3.9%, and soybean area is forecast to increase 0.1% versus last year, the USDA survey shows. 

That would be the fourth-largest corn-plus-soy area on record, after 2017, 2018, and 2021. The Prospective Plantings report represents the first survey-based estimates of 2023 spring crop plantings in the United States.

Gro’s own Planting Intentions Model, released three weeks ahead of the USDA report, also pointed to an increase in total corn-plus-soy acreage. However, Gro’s models were high on corn acres and low on soybeans. For cotton, Gro’s model signaled a notable decline in acres, and the USDA pegged cotton acres down 18.2% versus last year. The USDA increased wheat acreage by 9% year over year, in line with Gro’s estimates.

The all-important soybean/corn price ratio stood at 2.32 during the month of February – the lowest since 2016 and a strong preference for corn acres in 2023. (See graph below.) In 2016, US farmers planted 94 million acres of corn and 83.4 million acres of soybeans. 

Producers often will use the soybean/corn price ratio prior to planting as an indicator of the relative profitability of the two crops. While many other factors also figure in farmers’ planting decisions, the intent is to gain insight on the relative profitability of the crops on paper when comparing the November soybean futures price to the December corn futures price. The ratio during the month of February acts as a barometer for crop insurance/revenue protection. 

Additionally, improved fertilizer affordability has also supported the rise in corn acres year over year, as Gro wrote about here. 

Total wheat area represents a seven-year high and is up 9% from last year, the biggest year-on-year rise in wheat plantings since 1989. 

Farmers still have time to adjust their acreage decisions before seeds go in the ground. Gro users can follow market-price movements and weather-driven developments in April and May to stay ahead of the planting season, and daily updates from Gro’s Yield Forecast Models for corn and soybeans when the growing season gets underway. Gro’s Prevent Plant Models will be of particular interest in 2023 as the current precipitation forecast through at least mid-April raises the possibility of more prevent plant acres for corn this year. 

Unlike the USDA’s report, which relies on farmer surveys to arrive at estimates of what farmers are expected to plant for the upcoming season, Gro’s US Planting Intentions Models consider inputs ranging from the total viable farmland available to plant corn, soybeans, wheat, or cotton to the factors that change the opportunity cost between them.