In 2017, the U.S. planted the least number of acres of principal crops since 2011 at 318 million. In 2017, corn and soybean acres accounted for 56.5 per cent of all principal crop acres or 178.9 million acres. This was the third straight year that this 1-2 punch of many American farmers accounted for a larger share of total acres. It included 90.4 million acres of corn and a record of 90.2 million acres of soybeans.
In 2017, however, only Kansas, North Dakota, and Michigan increased their corn acres over the previous year by a significant amount. Kansas and North Dakota also increased their soybean acres over the previous year by a significant amount. Kansas added 700,000 acres of beans when compared to 2016, while North Dakota added an astounding 1.15 million acres!
This week, the USDA announced that they think US soybean area will indeed increase again in 2018, to a new record of 91 million acres. They also think corn acres will be 91 million acres. Increases year-over-year are also expected in rice, sorghum, barley, and oats, whereas cotton and wheat will see less American soil. More specifically, at 45 million acres of all wheat, that would be the lowest seeded number to the cereal since 1919.
From a production standpoint, the USDA thinks that US corn yields could average 173.5 bushels per acre in 2018 (current estimate for the 2017 crop is 175.4). This would imply a production mark of 14.5 Billion bushels (current 2017 estimate is 14.58 Billion). Accordingly, ending stocks by the close of the 2018/19 marketing year would climb to 2.61 Billion bushels, up from 2017/18’s carryout of 2.49 Billion bushels.
For soybeans, the USDA is expecting yields to be average 48.4 bushels per acre in 2018 (49.5 this year in 2017). This means production should hit 4.36 Billion bushels (versus 4.43 Billion this year), but carry out would tighten to 376 million bushels (the current 2017/18 carryout estimate is for 425 million bushels). From a demand perspective, there are some who think that the ethanol number may be too low for corn. But they think that the USDA’s expectations for soybean demand are right on the money.
Finally, the USDA estimated an average 2018/19 marketing year price for USD 3.30 / bushel for corn, $9.40 for soybeans, and $4.60 for winter wheat.
If you don’t think you should care about U.S. acreage, you’re wrong. North Dakota is obviously the most significant as relates to Manitoba grain prices. Speaking of which, in the past month, we’ve seen canola prices pull back a bit, thanks to stronger Canadian Loonie and strong producer deliveries. There are some pretty strong pricing opportunities in 2018 that shouldn’t be ignored. Thinking even further, now is the time to do some pencil farming and start putting together a strategy for the 2018/19 crop. This includes plugging in your input costs. Understanding where crop production returns are in the red or the black is critical process when targeting your new crop grain marketing plan.
Brennan Turner, President & CEO of FarmLead
Brennan Turner hails from Foam Lake, SK, where his family started farming the land in the early 1900s. After graduating with an economics degree from Yale University, Brennan played professional hockey and worked as a Commodity Analyst on Wall Street before starting FarmLead.com. FarmLead was named one of Canada’s top startups in 2015 and one of Forbes most innovative companies in agriculture in 2017.