US winter wheat seeding at 32.6 Mil Acres (unchanged from last year) was a bearish surprise, but insurance enrollment data did hint that acres would be down only slightly, if at all. The USDA’s RMA publishes wheat insurance enrollment data, which can be viewed just prior to the release of NASS’s winter wheat seedings report. The graphic at left compares enrolled wheat acres in KS, CO and NE, which were down 7%. NASS’s HRW seedings estimate was down 5%, and so the data fits easily within this model. The real story is that enrolled acres were not down sharply (such as last year), and so this a good tool to use in forecasting winter wheat acres in the future. Acreage surprises moving forward should be eliminated.
And now that NASS’s wheat acreage report has passed, it’s left for the market to decide the remainder of the US’s 2018 acreage matrix. Increasingly, we’re beginning to question major soybean area expansion, and market economics favor a moderate contraction in corn acres. The graphic attached shows the change in various markets since the beginning of 2016, and it’s clear that corn & soybeans have been outperformed by all other semi-major crops. Since early 2017, cash sorghum prices are up 30%, spot oat, cotton and spring wheat futures are up 10%, while spot corn & soybeans are down 3%. It’s logical to expect a decent acreage boost in these other crops, probably at the expense of corn, and possibly at the expense of soybeans – or at least any expansion in bean acreage could be very modest.
The table above displays historical planting intentions (not final acres), and ARC’s’ preliminary estimate on cropped acreage in 2018. Notice that the numbers assume an expansion in total area of 1.48 Mil acres (this total may be too large) with corn acreage is likely to decline on any further cut.
On a percentage basis, sorghum, barley & oats acres will increase the most, following by cotton. Spring wheat acres will be 700-750,000 higher than last year. Soybean acreage will hold steady vs intentions at 89.5 Mil acres. The competition from profitable minor crops is a phenomenon not seen in years.
