USDA: More Corn, Fewer Soybean Acres This Year

March 29, 2002

Editor: This article has been released to the joint OSU-Purdue electronic news service "Ag Answers," http://www.aganswers.net, which also posted it to the Data Transmission Network (DTN) and FarmDayta commercial agricultural information services. For information on Ohio State analysis, contact the source or Candace Pollock at (614) 292-3799 or pollock.58@osu.edu. WEST LAFAYETTE, IN -- America's premier crop stands to grab an even larger share of the nation's farm acres this spring. Farmers intend to plant 79 million acres of corn but just 73 million acres of soybeans, according to the U.S. Department of Agriculture's annual prospective plantings report. The report, issued March 28, is based on surveys with the nation's growers. The report provides interesting, and surprising, data, said Chris Hurt, Purdue University agricultural economist. "Nationally, we're going to see more corn acreage -- an almost 4 percent increase," Hurt said. "That comes out to 3.3 million more corn acres, which is a little higher than the market expected. The compensating balance is not as heavy a planting to soybeans as the market had anticipated. Farmers say they'll plant 1.1 million acres fewer in beans -- down about 2 percent. "Here in Indiana we're looking at similar kinds of shifts. Farmers intend to plant 6 million acres -- up about 200,000 acres. Where's that coming from? From a reduction in soybeans, of course -- a 200,000 acre drop, to 5.4 million acres." In Ohio, farmers are projected to plant 3.55 million acres of corn -- up 4 percent -- and 4.45 million acres of soybeans, a 3 percent decrease. Both crop acreage estimates are identical to those planted in 2000. "People are overlooking that both numbers are similar to two years ago," said Matthew Roberts, Ohio State University agricultural economist. "A better way to think about this is it's not that year going forward, we are seeing dramatic changes, but it was last year where we saw a dramatic aberration." Cheaper fertilizer prices, more favorable corn growing conditions in the Western Corn Belt and farm policy are contributing to the shift from soybean to corn acres this year, Hurt and Roberts said. "This year we've seen substantially lower nitrogen prices. Nitrogen is a major cost factor on corn," Hurt said. "That is why I think we'll see substantially more corn acreage in the Eastern Corn Belt. "Last spring was beautiful for getting corn planted in the Eastern Corn Belt. But out west, particularly in parts of Iowa, South Dakota and Minnesota, the weather was not cooperative and planting was delayed. Farmers could not get as much corn in the ground." Continued uncertainty in American farm policy also is driving soybean acres lower, Roberts said. "Because we are renewing the farm bill, the loan rates that farmers receive for their crops have not been set yet," Roberts said. "The general consensus is that corn and wheat will remain unchanged or will increase, while the soybean rate will decrease. The question is how much risk producers are willing to take to end up with a lower loan rate." Roberts said he was not surprised with the USDA's projections on genetically modified crop plantings. Nine percent of the Ohio corn crop and 73 percent of the soybean crop is expected to be biotech varieties. In Indiana, 16 percent of the corn and 83 percent of the soybean crop will be genetically modified varieties. "We continue to see an increase in GMO soybeans across the nation, and the reason for that is I think most people will agree that they are easier to manage and are very hardy," Roberts said. "There is very little GMO corn grown in Ohio, because the main genetic modifications to the crop don't really help our production." The biggest challenge to growing biotech crops is international markets, Roberts said. "Some countries are very resistant to genetically modified crops, especially with food crops, and that won't change," he said. "At the same time, I think they will find it harder and harder to maintain that stance as more of the producing regions around the world switch to GMO crops, especially soybeans." On the financial front, Thursday's USDA report is likely to send soybean prices higher but leave corn prices flat, Hurt said. "The numbers are a little friendly for soybeans," Hurt said. "Certainly the reduction in the size of the planted acreage intended by producers, coupled with the very good utilization we've had and tightening stocks, means that when we put it all together we'll probably see higher prices on beans. "The situation is a bit on the bearish side for corn, however. Corn continues to struggle in the export market, as far as usage is concerned. These USDA numbers suggest that not only will we have a sufficient carryover of corn through this summer, but also we'll be producing a 2002 crop pushing up around 10 billion bushels. That says there won't be much change in the prices we've seen the last couple of years."

Author(s): 
Steve Leer
Source(s): 
Chris Hurt