WASHINGTON, DC, US — As anticipated, the US Department of Agriculture in its March 31 Prospective Plantings report brought a number of surprises compared to trade expectations, potentially adding more volatility to the already highly-volatile grain and oilseed markets because of the Russia-Ukraine war.
Adding uncertainty heading into spring planting were much higher input costs, especially fertilizer, which some observers expected may push farmers away from high-input cost crops like corn to lower-input cost crops such as soybeans. That scenario appeared to be the case based on the USDA planting intention numbers.
“The trade kind of got it right as far as direction,” said Steve Freed, vice president of grain research, ADM Investor Services, Inc.
But the size of the moves in planting intentions were surprising in several cases. Some USDA planting intention projections missed pre-report trade expectations by a wide margin, including corn, soybeans, spring wheat and oats.
The USDA said farmers intend to plant a record 90.955 million acres of soybeans in 2022, up 4% from 2021 and up 3.4% from the USDA’s projection given during the Agricultural Outlook Forum in February. The largest increases (250,000 acres or more) from 2021 are expected in Illinois, Indiana, Iowa, Minnesota, Missouri, South Dakota and Tennessee.
The USDA soybean planting forecast was well above the average of trade expectations (88.727 million acres) but was within the full range of trade estimates.
Planted area of corn for grain was projected at 89.49 million acres, down 4% from 2021 and the lowest since 2018. Planted area is expected to be down from 2021 in 43 of the 48 reporting states, but with record high acreage in South Dakota. The largest acreage declines (200,000 acres or more) were forecast for Illinois, Indiana, Iowa, Kansas, Minnesota, Nebraska, North Dakota, Ohio and Wisconsin.
The USDA corn planted area forecast was below the full range of trade expectations (89.7 million to 93.5 million acres) that averaged 92.001 million acres. The March forecast also was well below the USDA’s Agricultural Outlook Forum projection of 92 million acres.
“I think the lower acres for corn in Iowa, Illinois and Indiana probably were all because of fertilizer prices,” Freed said.
Fertilizer prices shot up before the Russia-Ukraine war, largely due to logistical issues, but the war may have contributed to ongoing high fertilizer prices, he said.
All wheat planted area was forecast at 47.351 million acres, up 1% from 2021 but still the fifth lowest in records back to 1919.
Plantings of spring wheat other than durum were projected at 11.2 million acres, down 2% from 2021, including hard red spring wheat area at 10.5 million acres. Area for “other” spring wheat was expected by the trade to increase about 380,000 acres rather than decline 220,000 acres.
Durum planted area was projected at 1.915 million acres, up 17% from 2021.
Winter wheat area planted in 2021 for harvest in 2022 was estimated at 34.236 million acres, up 2% from 2021 but down 1% from the USDA’s Jan. 12 Winter Wheat and Canola Seedings report estimate of 34.397 million acres.
Because of price changes since early March (corn higher, soybeans lower), Freed said there still could be some switching between crops.
“It’s April 1,” Freed said. “Corn and wheat prices are up to Mother Nature. For corn, it’s demand and weather.”
Planted area of oats, grown in much the same region as spring wheat and durum, also was below trade expectations. Oats planted area was forecast at 2.547 million acres, down 1% from 2021 and the second lowest on record, compared with trade expectations of 2.702 million acres. Some had expected acreage for oats, as well as for spring wheat, to increase this year after weather-reduced production in the Upper Midwest and Canada in 2021 left stocks low in both countries.
“It’s a surprise given all-time record high oat prices,” said Randy Strychar, president of Oatinformation. “But, in the end, it’s about better returns for other crops. We’re likely to see lower-than-expected oat planting increases in Canada this year as growers focus on more profitable crops. The oat market is going to need to see at least average yields this spring to move toward replenishing oat supplies.”
Freed noted that logistics remained an ongoing problem, as well as the war in Ukraine and “how long it goes on.” Ukraine is one of the world’s top exporters of corn, and together, Ukraine and Russia account for nearly 30% of global wheat exports.
Demand also will be a factor in prices going forward, Freed said, noting that possible recessions in several major regions of the world could limit consumers’ disposable income.
Corn futures closed about 10¢ to 28¢ a bushel higher on March 31, with the largest gains in new crop months. Soybean futures dropped about 40¢ to 50¢ a bushel spot through July 2023. Wheat futures were mixed, with Chicago soft red winter futures down about 20¢ a bushel, KC hard red winter futures down about 15¢ a bushel, and Minneapolis spring wheat futures up about 20¢ a bushel nearby and about 5¢ to 10¢ a bushel in new crop months.
There also were surprises in planting intentions for some other crops.
Area planted to sorghum for grain was projected at 6.205 million acres, down 15% from 2021, with top-producing Kansas down 14% and Texas down 21%.
Area planted to rice in 2022 was forecast at 2.452 million acres, down 3.2% from 2021. Plantings in top-producing Arkansas were forecast down 2% from last year. Rice planted area is expected to be down in five of the six reporting states with only Louisiana acreage up from last year. US long-grain planted area was forecast down 1% from 2021, medium-grain down 8% and short-grain down 28%.
Peanut planted area was forecast at 1.571 million acres, down 1% from 2021, with area in top-growing Georgia down 3%.
Data for the Prospective Plantings report was gathered by the USDA from a survey of about 73,000 farmers during the first two weeks of March. The USDA will issue its 2022 Acreage report on June 30.