U.S. growers will plant 92 million acres of corn in 2019, the largest crop since 2016 and a 3.3 percent increase over last year’s 89.1 million acres, according to USDA Chief Economist Robert Johansson.
Speaking at the USDA Outlook Conference in Arlington, Va., on Feb. 21, Johansson said the corn increase will come at the expense of soybeans, which will fall to 85 million acres in 2019, down 4.7 percent from last year’s 89.2 million acres.
Johansson said while U.S. soybean prices have been slightly buoyed amid recent signs of progress in trade negotiations with China, the export outlook for the 2019 soybean crop remains challenging. “Currently, the U.S. has exported 24 million metric tons of soybean, down 13.5 million metric tons from this time last year,” he said. “Under the trade dispute, exports to China alone have plummeted by 22 million metric tons, or over 90 percent.”
All wheat acres in the U.S. will also fall in 2019, dropping to 47 million acres, down 1.7 percent from last year’s 47.8 million acres and representing a five-year low. After a dismal fall planting season, Johansson said winter wheat plantings are estimated to be at the lowest level in 110 years, with major acreage reductions reported in Kansas, Oklahoma, and Nebraska. He said this “strong contraction in area” should support wheat prices, however, and result in more spring wheat acreage planted in the Northern Plains.
“Any change in the current status of trade with China could have significant impacts on prices, both relative and absolute, and could shift acreage allocation in the coming year,” he added.
As for other crops, USDA projected cotton plantings at 14.3 million acres in 2019, up 1.1 percent from 2018 and hitting a five-year high for the commodity, while rice acreage is projected at 2.7 million acres, down 9.8 percent from 2018.
“The large growth in production is expected to push cotton prices sharply lower, falling 7 percent, or $0.05 per pound,” Johansson said. “Global economic conditions and trade barriers with China will be significant uncertainties for the cotton market in the coming year.”
Under expectations of continued Chinese tariffs, Johansson said the season-average soybean price should rise modestly to $8.80/bushel in 2019, up $0.20/bushel from 2018 “as the market begins the multi-year process of working down large stocks.”
Johansson pegged the season-average corn price at $3.65/bushel, up $0.05/bushel from 2018 and reflecting the second year of price increases “as carry out stocks are expected to continue their multi-year tightening.” Season-average wheat prices are projected to firm slightly to $5.20 per bushel, which Johansson noted is a “significant” increase from a near-term bottom of below $4/bushel in 2016/17.
“The current expectation of farm income at $66 billion in 2018 is a long way from the heights we saw when real net farm income peaked at $134 billion in 2013,” Johansson said. “Relative to the 10-year average, real net farm income is down 28 percent. Looking forward, net farm income is expected to rise slightly, remaining below $80 billion annually over the next 10 years.”
A Bloomberg survey of analysts conducted from Feb. 13-19 pegged 2019 corn plantings at an average of 91.7 million acres, soybeans at 86.1 million acres, and wheat at 47.2 million acres. Jason Miner, chemicals analyst with Bloomberg Intelligence, said on Feb. 21 that USDA’s projections are “curtailing high hopes for global agricultural chemicals suppliers,” referring to the numbers as a “mediocre” outlook for the industry.
“While U.S. farmers are widely expected by the industry to increase purchases this year, farm incomes are down, land is propping up equity, and corn planting may miss some targets,” Miner said, noting that both CF Industries Holdings Inc. and Nutrien Ltd. have recently suggested that 93 million acres of corn are possible in 2019.