Focus on Ag: USDA planting intentions report increases corn acres

The USDA Prospective Plantings Report that was released on March 31 projected a 4 percent increase in 2023 U.S. corn acreage compared to a year ago, along similar 2023 soybean acreage as a year earlier. The USDA planting intentions numbers came in higher than the grain trade expected for corn and lower than trade estimates for soybeans. The USDA Quarterly Grain Stocks Report was also released on March 31, which lists the estimated U.S. grain inventory as of March 1, 2023, for both “on-farm” and commercial grain storage. The USDA estimates for U.S. corn and soybean inventories came in below the average stocks estimates of the grain traders.

The USDA prospective planting acreage is based on survey data collected from producers in early March. The USDA estimates for intended 2023 U.S. corn and soybean acreage was viewed as rather “bearish” for “new crop” corn futures prices, meaning lower price expectations, and somewhat “bullish” for soybean futures prices on the Chicago Board of Trade (CBOT). After the USDA planting intentions report was released March 31, December 2023 corn futures were nearly steady and November soybean futures closed up 16 cents per bushel.

Typically, these late March USDA Reports are very critical to farm operators and grain traders due to their impact on grain market prices in the Spring and early Summer months. During these months, many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their “peak-price” during the period from April until June, which is why these reports are so important.

Highlights from the March 31st USDA planting intentions Report

Corn: The planting intentions report indicated an estimated 92 million acres of corn to be planted in the U.S. in 2023, which is an increase of 3.5 million acres or 4 percent from the 2022 corn acreage of 88.5 million acres. The 2023 U.S. corn acreage would still be below the 2021 corn acreage of 93.2 million acres. The highest corn acreage recorded in recent decades in the March USDA survey was 97.3 million acres in 2012. The current USDA corn acreage estimate was about 1.2 million acres above the average grain trade estimate of near 90.8 million acres. Based on the report, 2023 planted corn acreage is likely to increase in 40 of the 48 States that reported. The largest expected increase in 2023 corn acres is a 27 percent increase in North Dakota, with an expected increase of 800,000 acres. Minnesota is expected plant 8.35 million acres of corn in 2023, which is an increase of 350,000 acres. Iowa and Illinois are projected to have the largest 2023 corn acreage in the U.S., at 13.1 acres and 11.0 Acres respectively, with both States expecting an increase of 200,000 acres compared to a year earlier. The 2023 corn acreage is also expected to increase in South Dakota, Ohio, Indiana, Missouri, Kansas, and Wisconsin. The only major corn producing State projecting a small decrease in corn acreage for 2023 is Nebraska, with an expected decrease of 100,000 acres compared to a year earlier.

Soybeans: Based on the estimates in the March 31st Planting Intentions Report, U.S. soybean acres are projected at 87.5 million acres, which represents a small increase of 55,000 acres from a year ago. In the 2022 March 31st Planting Intentions Report, USDA projected 91 million soybean acres for 2022; however, the final acreage ended up at only 87.4 million acres. The 2021 U.S. soybean acreage was 87.2 million acres, and the record was 90.2 million acres in 2017. The projected USDA soybean acreage came in about 700,000 acres below the average grain trade estimates for 2023. The highest increase in estimated 2023 soybean acreage was again in North Dakota, with an expected increase of 850,000 acres. Smaller increases in 2023 soybean acreage are likely to occur in Minnesota, South Dakota, and Wisconsin, while decreases in acreage are expected in Indiana, Kansas, and Missouri, with no change in acreage in Iowa, Illinois, Nebraska, and Ohio.

Wheat: Due to the continued potential impacts on worldwide wheat production that has resulted from the Russian war in Ukraine, there was considerable interest in the U.S. planting intentions for Spring wheat in 2023. The intended total U.S. wheat acreage for 2023 is estimated at 49.9 million acres, which is up from 45.7 million acres in 2022 and compares to 46.7 million acres in 2021. Spring wheat acreage for 2023 was estimated at 10.6 million acres, which is very similar to last year. Spring wheat acres in 2023 are expected to decline in Minnesota, North Dakota, and Montana and stay the same in South Dakota.

Highlights from the March 31st USDA Grain Stocks report:

Corn: The total U.S. corn stocks on March 1, 2023, were listed at over 7.4 billion bushels, which is the lowest in the past nine years and is 5 percent lower than the corn stocks of 7.76 billion bushels on March 1, 2022. The March 1st USDA corn stocks estimates were slightly below the average grain trade estimate and remain quite tight compared to corn stocks levels over the past decade. The one negative in the USDA grain stocks report was that implied corn usage from December, 2022 through February, 2023 was down over 400 million bushels compared to a year earlier; however, some of that difference may have been made up in March of 2023, with some recent robust corn export sales to China.

Soybeans: Soybean stocks on March 1, 2023, were listed at just under 1.69 billion bushels, which is the lowest in the past six years and is a decrease of over 12 percent from 1.93 billion bushels on March 1, 2022. The total U.S. soybean usage from December, 2022 through February, 2023 was estimated at 1.34 billion bushels, which was up about 11 percent from a year ago. The March 1 soybean stocks estimate came in slightly below the average estimate of grain traders. This fact, combined with the lower-than-expected USDA soybean acreage estimate for 2023, resulted in the sharp increase in CBOT soybean futures prices following the release of the March 31st reports.

Wheat: Total wheat stocks on March 1, 2023, were listed at just over 946 million bushels, which is down from 1.03 billion bushels on March 1, 2022. The 2023 wheat stocks estimate was slightly above the the average grain trade estimates. Wheat prices have remained quite volatile in recent months, as the world wheat trade adjusts to changing dynamics surrounding the Russian war in Ukraine. Current corn and soybean market prices remain at some of the highest levels in the past decade, which has offered farm operators some excellent grain marketing opportunities in the past few months. Given the ongoing tight grain stocks for corn and soybeans, along with the March 31 USDA acreage estimates, there should continue to be some strength in the near-term cash markets in the coming weeks. New crop corn and soybean prices for the Fall of 2023 have not been as strong in recent weeks and local basis levels have been wider than in the past couple of years. The Fall harvest prices are likely to remain quite volatile in the coming months, either up or down, depending on Spring planting progress, weather conditions during the growing season, and future USDA supply and demand reports.

The March 31st USDA report was based on producer surveys of planting intentions, as of March 1st; however, there is potential for these planting intentions to be adjusted slightly when final planting takes place. The reduction in fertilizer costs for corn production in 2023 compared to a year earlier was likely a factor in the increased acreage estimates for corn this year. Some factors that could lead to increases or decreases in the final U.S. corn and soybean acreage include any significant changes in the current strength of the grain markets and the potential for planting delays in some areas of the Northern Corn Belt. Some of the largest projected increases in 2023 corn acreage were in North Dakota, Minnesota, and South Dakota, all of which could face the potential of major planting delays in some areas. In recent years, “prevent plant” acres have played a role in final acreage numbers.

For additional information contact Kent Thiesse, farm management analyst and senior vice president, MinnStar Bank, Lake Crystal, Minn., at 507-381-7960 orkent.thiesse@minnstarbank.com.