Following Tuesday’s report, which detailed reduced corn and soy yield potential across the Central & Northern Plains, AgResource extends this research into forthcoming changes in new crop (2018) planting intentions.
Major changes are expected amid this year’s drought and the surge in Plains-based crop prices. ARC notes year-over-year acreage changes based on price, tend to center on regions previously considered fringe producing areas such as the Plains and Delta.
The graphic reflects changes in soybean acreage (as an example, corn changes are similar) in the Plains, Delta and Midwest.
Notice that on a percentage basis, changes are fairly dramatic in the Plains, and not so much in the Midwest. Since 2005, the average annual change in Plains soy acreage rests at 9%; the average change in Midwest soy acres rests at just 4%. Price holds a measurable impact on Plains/Delta planting intentions!
And as for price, it’s clear that certain grains are vying for acreage across the drought-stricken areas of the Plains. Wheat and oat markets in particularly will demand expanded seedings in 2018 to avoid US shortfalls.
In the last 12 months, spring wheat futures have rallied nearly 60% – and to a $2.50 premium to corn basis Dec ‘18 futures. And, oat futures since last July are up 42% and have touched a 30-month high. At the same time, corn is up slightly, and beans are unchanged.
Based on price/profit, there will be substantial changes to the acreage mix across; ND, SD and MT, KS and CO next spring.
AgResource research notes that additional rallies can be expected in oat/spring wheat futures as reduced production is better assessed in the weeks ahead. Wheat quality is becoming a real issue across the world and the market will have to make sure that it secures additional acres next year.
Simply put, it’ll be tough to maintain the current corn/soybean acreage across the Plains in 2018! The table above reflects ARC’s initial estimate for combined new crop (2018) planting intentions for; ND, SD, MT and MN. Spring wheat, oats, canola and hay acreage will rise, corn acres are projected to decline 1.1 Mil and soybean acres are pegged down 2.0 Mil acres.
Without offsetting changes across the Midwest & Delta, it’s likely that total ’18 US corn acres will fall to 89.5 Mil and soybean acres to 87.5 Mil. Assuming trend yield and trend consumption, US soy stocks in 18/19 will be no higher than 275-350 Mil Bu. The point is that the Plains drought will support corn/bean prices via lower 2018 seeding intentions. The impact is not only the loss of this year’s spring wheat, oats and summer row crop production, but the need for additional small grain acres in ‘18 that offers a longer bullish tail