Citing in part the impact of high input costs, USDA’s 2008 Prospective Plantings report projects the U.S. corn crop at 86 million acres, down 8 percent from last year’s 93.7 million acres. While most analysts expect the 2008 crop to trail last year in planted area, many were surprised by USDA’s low estimate. As recently as late February, a USDA economist told Green Markets audio conference listeners that the agency was expecting a 90 million acre corn crop in 2008, down just 4 percent from 2007.
“Expected acreage is down from last year in most states as favorable prices for other crops, high input costs for corn, and crop rotation considerations are motivating some farmers to plant fewer acres to corn,” USDA’s National Agricultural Statistics Service said in the report, which was released March 31. “Despite the decrease, corn acreage is expected to remain at historically high levels as the corn price outlook remains strong due in part to the continued expansion in ethanol production.”
The biggest losses in corn production are in the Western Cornbelt, with Iowa acreage dropping 9 percent, Nebraska 12 percent, and South Dakota a full 19 percent from 2007. According to AgWeb, a division of Farm Journal Media Inc., these three states account for fully half of the ethanol production in the U.S.
USDA said it expects to see a sizable chunk of that corn acreage switched to soybeans in 2008. The agency projected the U.S. soybean crop at 74.8 million acres, up a whopping 18 percent from last year, but 1 percent below the record high set in 2006. USDA said it expects soybean acreage increases in all states except West Virginia, with the largest increases projected in Iowa and Nebraska, up 1.25 million acres and 1.20 million acres from 2007, respectively.
Some remained skeptical of USDA’s projected acreage shift from corn to soybeans. “As we look at those corn numbers that is just not going to be enough corn to even begin to meet the needs for our livestock industry, for the ethanol producers, and the export sector,” said Purdue Agricultural Extension Economist Chris Hurt after Monday’s release of the USDA report. “Consequently we have seen corn prices stay fairly steady, or even increase a little bit after this report, and soybean prices based on the report have dropped very sharply.”
Hurt noted on the Hoosier Ag Today website that as of the close of markets on March 31, “our estimates were showing, for average quality Midwestern land, $135 an acre higher return to plant corn vs. soybeans. We have to get more acres of corn vs. what those intentions were on March 1st.”
Dr. Gerald Bange, chairman of the World Outlook Board for USDA, told a Green Markets audio conference audience on Feb. 27 that although USDA is “cognizant of the sharp increase in fertilizer prices,” the “net return on corn is still profitable” even with the drastically higher input costs (GM March 3, p. 1).
Some industry sources speculated that the lower corn acreage estimate was due to the wet weather that has saddled much of the Midwest during late March and continues to delay the start of planting. The only problem with that theory is that the USDA survey upon which the projections are based was conducted during the first two weeks of March, before the rain delays were a factor.
USDA estimated all wheat planted area for 2008 at 63.8 million acres, up 6 percent from 2007. The 2008 winter wheat planted area, at 46.8 million acres, is 4 percent above last year and up slightly from the previous estimate, USDA said. Area planted to spring wheat for 2008 is expected to total 14.3 million acres, up 8 percent from 2007. The intended Durum planted area for 2008 is 2.63 million acres, up 22 percent from the previous year.
True to analysts’ predictions, USDA said it expects a significant downturn in cotton planted area in 2008. Total cotton acreage is projected at 9.39 million acres, down 13 percent from 2007. USDA said growers intend to decrease planted cotton area in all states except Georgia and Oklahoma, with the largest acreage declines in Arkansas, Mississippi, Tennessee, and Texas.
Area planted to rice for 2008 is expected to total 2.77 million acres, up 9,000 acres from 2007, but 2 percent less than was planted in 2006. “Despite rising prices, increases in input costs and high prices for competing commodities have growers weighing the benefits of increasing acreage,” USDA said. Arkansas growers intend to plant 1.37 million rice acres this year, up 3 percent from last year. Planted acreage in California and Texas is also expected to increase, while acreage in Louisiana, Mississippi, and Missouri is expected to decrease from 2007.
The USDA Planting Projections are not an absolute. Last year, the Prospective Plantings Report issued March 30, 2007, for 2007 was for 90.45 million acres of corn to be planted (GM April 2, 2007, p. 10). This was actually some 3.35 million acres, or 3.8 percent below the 93.7 million that was actually planted.