A look at total crop acreage

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On Jan. 10, USDA released its Annual Crop Production report. In general, the data released will remain unchanged, perhaps until the next Census of Agriculture. Many people expected USDA to raise the corn production estimate for 2013 but USDA lowered the yield and cut the crop by 64 million bushels. Production is now put at 13.925 billion bushels with a national average yield of 158.8 bushels per acre. The yield is substantially higher than the 123.4 bushels per acre recorded for 2012, but still about 5 bushels or more below trend. The final planted acreage figure for 2013 was 95.4 million acres but the data show that farmers wanted to plant more than 98 million acres to corn, but were unable to reach that level due to the wet spring which caused severe planting delays. USDA also made minor adjustments to production levels for soybeans (up 31 million bushels), and cotton (up 120,000 bales).

click image to zoom USDA also reports acreage planted to the 21 “principal” crops. The total principal crop acreage for 2013 is put at 324.8 million acres, down 805,000 from the 2012 total. With farmers saying they were unable to plant more than 8 million acres because of the wet spring, it is surprising that the change from 2012 to 2013 wasn’t larger. But total crop acreage in Texas rebounded by 1.5 million acres following the drought in 2012 which partially offset declines in other states including a 456,000 acre reduction in Iowa and a nearly 400,000 acre drop in Wisconsin. However, total crop acreage has increased fairly significantly in recent years. The 5-year average for total principal crop acreage is 320 million acres.

There is a lot of talk in the industry about acreage for 2014. Several sources are predicting that corn acreage will fall to around 90 million to 92 million acres this spring. That implies a drop of about 4 million to 5 million acres from the 2013 total. However, remember that farmers wanted to plant more than 98 million acres to corn last year and would have with a more normal spring. So these forecasts really imply a drop in corn acreage of closer to 7 million acres year-to-year. That would be a huge drop, especially with 2014 corn futures prices above $4.50 and fertilizer prices down by more than 20 percent from a year ago. But assuming that we do see corn acres down that much – where do all of those acres go?

Some of the acreage not planted to corn could shift to soybeans. Forecasts for U.S. soybean acreage for 2014 range as high as 82 million acres, up 5.5 million from the 2013 level. But the weather also kept farmers from planting all of the soybeans they wanted last year. Farmers reported that the weather kept them from planting an additional 1.7 million acres last spring. If that is accurate, the implied increase in soybean acreage may be closer to 4 million acres even if we get to the 82 million acres some forecasters are predicting.

The Winter Wheat Seedings report showed that farmers planted nearly 1.2 million fewer acres to winter wheat last fall with almost all of the decline in soft red producing areas. This suggests that fewer wheat acres will be double-cropped with soybeans for 2014. Further total wheat acreage will probably fall below 2013 levels unless farmers plant a lot more spring wheat. However the wet spring in 2013 had a pretty significant impact on spring wheat acreage. Farmers reported that the weather kept them from planting about 2 million acres of wheat – with most of that decline in North Dakota. Accordingly, total wheat acreage in 2014 may come in close to the 2013 total of 56.2 million acres.

click image to zoom So to summarize – total principal crop acreage came in at 324.8 million acres, but farmers said that weather kept them from planting an additional 8.3 million acres of the 10 major crops so the total for all 21 crops would probably be closer to 9 million acres. The more “normal” level of acres not planted due to weather is around 1.5 million acres. So with “normal” prevented planted acres in 2014 the total acreage available would be about 334 million acres. Further, a total of 1.6 million acres of crop land exited the Conservation Reserve Program at the end of September and at least some of that land will probably come back into production in 2014. So we start with a pool of about 335 million acres for 2014 crops, 10 million more than was planted in 2013.

With the reduction in soft red winter wheat acreage, we will probably see a decline in double-cropped soybean acres this year, and the decline could be near 2 million acres. In addition, the data suggests that some of the land planted to winter wheat for 2013 was either abandoned and planted to another crop – such as sorghum - or got counted as other hay acreage harvested. This could mean that an additional 2 million to 3 million acres got counted twice in 2013, boosting the total principal crop acreage. So maybe the “extra” acres available for 2014 is closer to 5 million acres than the 10 million suggested before.

The wet weather last spring also had a negative impact on the acreage of more minor crops, such as canola, sunflowers, dry beans and others. If we assume that the deviations of these crops from intentions to actual acreage were all weather related and that acreage will snap back in 2014, we can account for nearly another million acres. So the net increase in land available for 2014 could be down to 4 million acres. That sounds less dramatic that the 10 million acres we started with.

But we still get back to the question of what happens to these acres. Crop prices may fall far enough so that revenue does not cover all production costs. But in the short term that is probably not enough to convince farmers to leave the land idle. Landowners have to make land payments, pay real estate taxes and other fixed costs whether they grow a crop or not. So farmers will continue to plant if revenue covers out of pocket costs and at least part of these fixed costs. Renters need money to pay the cash rent as well as the operating costs for fertilizer, seed, etc. But the demand for land to rent is competitive and if a renter decides to give up the land for a year and not plant a crop - someone else will step up. Prices for crop insurance will be set in February and it appears that the corn price will be near $4.50 per bushel and the soybean price will be above $11 per bushel. These prices are probably high enough to keep farmers from leaving the land stand idle.

The conclusion from this analysis is that we could see an increase in total crop acreage in 2014 even with the lower crop prices. We probably won’t see the kind of decline in corn acreage that we would need for production to match up with expected demand. With trend yields next year, corn stockpiles could get pretty burdensome.

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