More corn, more soybeans, more wheat?
Last year, farmers planted a massive corn crop that ultimately tanked on account of drought stress. Now, early trade expectations are for an even bigger planting this year. And, not just corn; soybeans and wheat could eclipse recent records for planted acres, too.
Recent analysis shows it could be a record year for plantings all-around, with corn leading the way to an expected 99 million acres. But, that won't be all; anaylsts say soybean acres could reach 79 million this year (2 million more than last year), while wheat plantings last fall fell just shy of 42 million acres, up slightly from last year but just lower than analysts expected, expected to a University of Missouri report.
"Corn acres this year will likely be about 99 million acres, which is 2 million more than last year," says University of Missouri agriculture business specialist David Reinbott. "There were 41.82 million acres of winter wheat planted. The trade estimate was closer to 42.6 million acres. That’s about 700,000 less."
But, whether those larger plantings lead to higher crop output -- and potentially lower grain prices -- depends entirely on one thing: Whether the drought ends or continues. Just don't get too caught up in trying to make that assessment too soon, because early moisture expectations won't likely have much to do with how things wind up by the time harvest rolls around, says University of Illinois ag economist Darrel Good.
"As learned again last year, the yield implications of those conditions are dwarfed by the impact of growing season weather. While current drought conditions are of concern, those conditions alone do not provide much information about 2013 yield prospects," he says.
Adds Agriculture.com Marketing Talk frequent contributor DKIL: "There may be more acres, but if these are marginal acres brought in, likely CRP, in an already drought-stricken region, just what yield are they going to predict? Average yield on 99 million acres should not be high!"
Still, planting 99 million acres could yield up to 91.5 million harvested acres if the weather returns to normal. That would put acreage 4 million ahead of last year, and would "point to prospects for an extremely large crop in 2013," Good says. It's still way too early to take a number like that to the bank, he adds.
"Early season acreage expectations are often not a good forecast of actual acreage. Last year, for example, The USDA's March Prospective Plantings report indicated intentions to plant 95.864 million acres of corn, nearly 1.4 million more than the average trade guess," Good says. "Actual planted acreage exceeded early expectations by the trade by nearly 2.7 million acres."
If you subscribe to the notion that "short crops have long tails," as Good says, you're probably expecting at least a dry start to this year's growing season. Just don't use that as your entire measuring stick -- for both crop potential and resulting grain prices -- heading into this spring.
"As learned again last year, the yield implications of those conditions are dwarfed by the impact of growing season weather. While current drought conditions are of concern, those conditions alone do not provide much information about 2013 yield prospects," he says. "While prices for the 2013 corn crop are currently about $0.70 below the peak reached in September 2012, they are well above the level that would be expected if the 2013 crop reached its full potential."