Weekly Insights: U.S. Planted Acreage

U.S. Planted Acreage

 

USDA NASS Prospective Plantings report coming March 31 will provide the first real understanding of crop acreage for 2021/22. The acreage estimates in this report are based primarily on surveys conducted during the first two weeks of March. The March Agricultural Survey is a probability survey that includes a sample of approximately 80,000 farm operators selected from a list of producers that ensures all operations in the United States have a chance to be selected. Data from operators were collected by mail, internet, telephone, or personal interview to obtain information on crop acreage intentions for the 2021 crop year.

Higby Barrett provides a five-year U.S. acreage forecast by U.S. counties and districts for 22 row crops. The excel spreadsheets with history to 1990 include FIPS Codes for ease of mapping. The County Acres report is produced quarterly.

The following is a high-level breakdown by state and crop and is built from our County Acres forecast. This article will provide context as to why the U.S. farmer does not just plant more acres when prices are at higher than normal levels. The conclusion is U.S. corn and soybean acreage could increase more than what Higby Barrett is forecasting, but to increase acreage millions of acres would require the weather to be perfect between now and planting. The probability of that occurring is very small but could occur.

USDA released its initial acreage projections for 2021/22 based on current data versus the long-term projections, which are based on October WASDE. USDA forecasts corn planted acreage of 92 million, with harvested acres of 84.4 million; soybean planted acreage of 90.0 million, with harvested acres at 89.1 million; wheat planted acreage of 45.0 million, with harvested acres at 37.2 million; cotton planted acreage of 12.0 million, with harvested acres at 10.0 million. Higby Barrett’s planted acreage for corn is over a million higher at 93.3 million, soybeans acreage the same, wheat at 800 thousand higher, and cotton at 500 thousand more.

Some analysts were expecting corn acreage to be 96 million acres, soybeans at 92 million, wheat at 47 million, and cotton at 12.6 million. From a purely economic standpoint, it seems higher acreage is exactly what the doctor ordered to meet world demand, especially with South America’s crop in the ground.

At first glance, adding 10 million additional acres seems like an easy task. The reality is U.S. planted acreage has been remarkably steady for decades. With more acreage tried to government programs and fewer acres double-cropped, the actual number of acres in row crop operations is greater than the chart indicates. Likewise, in years with large prevent plantings, the farmers will game the system and overstate the actual planted acreage.

U.S. Planted Acreage by Crop

(source: USDA Higby Barrett)

 

A few factors limit increasing acreage much above recent record levels. Government programs play an important role in the economic feasibility of row crop farming. To receive payments from government programs, the farmer agrees to leave certain types of acreage unfarmed. The Conservation Reserve Program (CRP) pays farmers to put land that meets certain requirements into conservation. USDA assumes CRP acreage will increase by eight million acres in 2021.

On one hand, lowering the CRP acreage would free up land for increased plantings, but will farmers bypass short-term gains for long-term benefits? Also, as land ownership passes hands to a younger generation that often lives in a city, many new owners view enrolling land into CRP as the ecologically correct action. Concerning the CRP forecast, the USDA has the best information. It should be noted, the Biden administration has come out in support of increasing CRP acreage.

Many government programs are based on historical base acreage. Making the decision to raise crops outside the government programs is not taken lightly. The ethanol government-driven expansion in the 1990s pulled new acreage into production, but that was a guaranteed multi-year event.

Government subsidized insurance programs must be approved for a crop in a defined region. What the crop price is when enrolling in insurance is a major factor in the farmer’s decision. The lack of an insurance program impedes planting new crops.

The most obvious factor that impacts planting decisions is the climate. Certain crops just grow better than other crops in certain locations. To that end, changing government policies, seed technology, improved inputs, improved machinery, and better water management have enabled corn and soybeans to be grown more economically in hotter, colder, and drier climates. The result is a continued expansion of corn and soybean acres in regions that have less than ideal growing regions.

The easiest way to increase the acreage of corn and soybeans is to pull acres from other crops. As can be seen from the following charts, a large percentage of acres have been permanently shifted from barley, oats, sorghum, sunflowers, cotton, and wheat into corn and soybeans. Shifting each additional acre becomes more difficult because the climate is less ideal for growing corn and soybeans, and not all the traits of any single crop can be replaced. For example, recipes that use barley used for malting cannot be replaced with corn. Barley is a dual crop, which means barley that is not malting quality will be fed.

Barley Planted Acreage by State

(source: USDA Higby Barrett)

 

From 1990 to 2010, U.S. acres for barley, oats, sorghum, sunflower, cotton, and durum declined 20 million, from 47 million to 27 million. From 2010 to 2020, acreage has not declined. Based on the last 10 years, switching acreage from these crops to corn and soybeans will be difficult.

Oats Planted Acreage by State

(source: USDA and Higby Barrett)

 

Sorghum Planted Acreage by State

(source: USDA and Higby Barrett)

 

Sunflower Planted Acreage by State

(source: USDA and Higby Barrett)

 

Cotton Planted Acreage by State

(source: USDA and Higby Barrett)

 

Durum Planted Acreage by State

(source: USDA and Higby Barrett)

 

For alfalfa, other spring wheat, and winter wheat, U.S. acreage from 1990 to 2010 has declined from 99 million to 71 million, for a difference of 28 million. From 2010 to 2020, acreage has declined an additional 12 million acres, for a total of 40 million. So, more acreage can be pulled into corn and soybeans, but the rate is slowing.

Other Spring Wheat Planted Acreage by State

(source: USDA and Higby Barrett)

 

Winter wheat is often double-cropped with soybeans. States that are more likely to double-crop winter wheat have experienced an acreage decline of seven million, from nine million in 1990 to two million in 2020. With double crop acreage declining, the number of acres being actively farmed must increase to keep crop acreage even.

Winter Wheat Planted Acreage by State

(source: USDA and Higby Barrett)

 

Alfalfa Planted Acreage by State

(source: USDA and Higby Barrett)

 

From 1990 to 2020, corn and soybean planted acreage has increased from 132 million to 174 million, for an increase of 42 million. The only other crops to show an increase in acreage are canola, chickpeas, flaxseed, rice, sugarcane, and sweet potatoes with approximately 16 million acres out of production. For 2021/22, Higby Barrett is pulling 10 million acres back into production.

Corn Planted Acreage by State

(source: USDA and Higby Barrett)

 

Soybean Planted Acreage by State


(source: USDA and Higby Barrett)

 

Alabama is representative of the Southern States. Acreage in specialty crops, such as sweet potatoes and peanuts, will increase with processor demand. With the ability to grow corn and soybeans more successfully, oats and sorghum acreage has all but disappeared. Cotton is the crop with acreage to lose to corn and soybeans, but with cotton price above 90 cents per pound, pulling acreage will be difficult.

Alabama Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

Pennsylvania Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

East Coast states and Corn Belt states have already switched acreage into corn and soybeans. One issue is farmland being turned into residential areas. Although the amount of land being urbanized is not large, it presents a challenge when trying to find more acreage.

Ohio Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

Iowa Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

The Plains states are the region of the country where both acreages can be switched into corn and soybeans, and where row crop acreage can be expanded. The region grows a wide range of crops. Corn and soybeans are more concentrated on the eastern side of this area due to precipitation decreasing from east to west.

Nebraska Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

South Dakota Planted Acreage by Crop

(source: USDA and Higby Barrett)

 

North Dakota Planted Acreage by Crop

 

(source: USDA and Higby Barrett)

 

In the Northern Plains states, the ability of the crop to handle cold temperatures is also a consideration. Another factor is a short growing season.  Based on available land in the Northern Plains states, corn and soybean acreage can be increased if the weather cooperates. The key to increasing acreage beyond what Higby Barrett is forecasting is a warmer than normal spring that allows more corn and soybeans to be planted. Even with short-season varieties of soybeans and drought-resistant seeds, heavy snowstorms in March and April could quickly close the door on increasing corn and soybean acreage beyond USDA’s forecast.

On the flip side, if the Northern Plains do receive a warmer than normal spring planting season, without the snowfall the current drought will intensify. Even with sky-high soybean and corn prices, the weather is pushing the farmers towards drought-resistant crops that are traditionally grown in regions with lower rainfall.

U.S. Drought Monitor (March 2, 2021)

 

U.S. Seasonal Drought Outlook (March 2021)

 

 

The conclusion is that U.S. corn and soybean acreage could increase more than what Higby Barrett is forecasting, but to increase acreage millions of acres would require the weather to be perfect between now and planting. The probability of that occurring is quite small but could occur.

 

To send a question to the author, or to learn more about this topic, click here.

For assistance with brokerage or hedging services, please click here.

 

This material is produced by Higby Barrett LLC Copyright 2021. All rights reserved. The views expressed and information contained in this publication is believed to be accurate but is not guaranteed by Higby Barrett LLC or the Client. Higby Barrett assumes no responsibility or liability for any action taken because of any information or advice contained in this document, and any action taken is solely at the liability of and responsibility of the user.

 

 

 

Back