Soybeans may gain acres during spring 2014
URBANA, Ill. (University iof Illinois) – The 2013-14 marketing year for U.S. corn and soybeans is only in the second month.
According to a University of Illinois agricultural economist, there are many unknowns about the size of those crops, the strength of demand, and price levels.
In spite of those uncertainties, the market is trying to anticipate planted acreage in 2014, and some analysts are already forecasting acreage levels for next year.
“Anticipating acreage for 2014 is complicated by unfinished business with respect to 2013 acreage estimates,” said Darrel Good. “As background, the U.S. Department of Agriculture’s National Agricultural Statistics Service estimates that planted acreage of principal crops from 2007 through 2012 ranged from 315.1 million acres in 2011 to 326.3 million acres in 2012.”
Principal crops include planted acreage of corn, sorghum, oats, barley, rye, wheat, rice, soybeans, peanuts, sunflower, cotton, dry edible beans, potatoes, sugar beets, canola and proso millet; harvested acreage of hay, tobacco, and sugar cane; double-cropped acres; and unharvested small grains planted as cover crops.
Variation in planted acreage reflects variation in the amount of double-cropped acreage, failed acreage replanted to another crop, and the magnitude of prevented planted acreage.
“When the Farm Service Agency estimate of prevented plantings is added to the NASS estimate of planted acreage, the total from 2007 through 2012 varied from 322 million in 2007 to 327.5 million in 2012,” Good said.
In the June 2013 Acreage Report, NASS estimated planted acreage of principal crops this year at 325.6 million acres. Additional acreage surveys conducted in July resulted in a 550,000-acre reduction in the estimate of soybean acreage and small adjustments in the estimates for cotton, dry edible beans and sugar beets.
Small adjustments were also made for rice and peanuts in the August crop production report. The estimate of planted acreage in that report was 325.1 million, 1.3 million less than planted last year.
Good said that FSA’s September updated report showed prevented planted acreage at 8.2 million in 2013.
“Adding that estimate to the NASS estimate of planted acreage yields,” Good said, “is a total of 333.3 million acres, 5.8 million larger than the total of a year ago.”
That total is unrealistically high, he said, and has been an expectation that the NASS estimate of planted acreage, particularly for corn, would eventually be reduced.
Such a reduction would have been expected in the October crop production report scheduled for release today.
The timing of the next report, however, is in limbo due to the partial shutdown of federal government activities, he said.
“whatever the final estimate for September 2013 turns out to be,” Good said, “total crop acreage should be larger in 2014 for at least two reasons. These are:
- It’s unlikely that prevented acreage will be as large next year of a decline to a more normal level could boost crop acreage by 6.5 to 7 million acres.
- Contracts on 3.3 million Conservation Reserve Program acres expired at the end September. However, 1.7 million acres were enrolled in a new sign-up period in 2013 so that a net of about 1.6 million acres of former crop land are available for pasture or crops in 2014.
“Lower commodity prices in general could result in more idled acreage or more pasture in 2014, but the increase would likely be small,” Good said.
Corn and soybeans
“The current thinking,” Good said, “seems to be that acreage will be shifted from corn to soybeans as the current large corn harvest will result in a substantial buildup of inventories and low corn prices in relation to soybean prices.
“That is certainly the current situation for old-crop prices. The ratio of November 2013 soybean futures to December 2013 corn futures is near 2.9.
“However, planting decisions should be based on new-crop prices..”
The current ratio of November 2014 soybean futures to December 2014 corn futures is 2.4, Good said. New-crop soybean prices are at a discount to old-crop prices while new-crop corn prices are at a premium to old-crop prices.
The lower new-crop price ratio may reflect the expected acreage shift, but in fact discourages such a shift.
“Many corn and soybean producers have already made acreage decisions for 2014, and more decisions will be finalized as the current harvest is completed,” Good said. “If acreage of corn remains relatively large in 2014, the combination of trend yields and a very mature market for U.S. corn would result in a further buildup of inventories next year.
“Under that scenario, prices would be lower next year, not higher as currently reflected in the market.”
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