By Todd Hultman
As we head toward USDA's Prospective Plantings report on Friday, March 31, it seems widely accepted that soybean acres will be higher in 2017 and corn acres lower due to soybeans' more attractive new-crop prices. December corn was trading at $3.79 3/4 on Monday morning, a little below the $3.85 that USDA estimated a bushel of corn cost to produce in 2016.
November soybeans, on the other hand, were trading at $9.70 1/2 Monday, 7% above the $9.07 a bushel USDA estimated for its production cost in 2016. While this year's economic incentive leans toward more soybean acres, profitability is not the only factor that matters. Many will stick to rotation plans that are best for the long-term health of their soil.
The U.S. has had a long tradition of planting more corn than anything else, and there has only been one year since 1980 when more soybeans were planted than corn. Even as attractive as soybean prices are in 2017, 90 million to 92 million corn acres are expected to exceed 88 million to 89 million soybean acres.
At this stage of the game, it is all guessing, as planting has only recently begun in the Southern U.S. Friday's prospective planting estimates are based on USDA's attempt in early March to survey 83,000 producers and, while it may be a noble cause, it too is a form of guessing. With the memory of last November's presidential election still vivid, we don't need to debate the accuracy of polling data.
In the bigger scheme of things, I find it hard to believe that Friday's planting guesses will tell us anything that we don't already know. In 2016, planted acres of corn, soybeans, and wheat totaled 227.60 million acres, an area that has not changed much the past five years and probably won't show much change this year.
I have no argument with the popular expectation that some corn and wheat acres will probably shift to soybeans and some may shift to cotton or other choices. But there is no reason to believe that the expected corn and wheat reductions, by themselves, will be bullish for either corn or wheat prices.
In other words, the direction of prices in 2017 will once again come down to weather, and Friday's report won't help us in that regard. It is still early, but so far, we have no reason to expect planting problems this spring or any significant roadblock to a fifth consecutive year of big harvests. At best, Friday's survey results could luck out and be accurate but won't tell us anything important. At worst, they could be downright misleading.
Todd Hultman can be reached at email@example.com
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