USDA’s Corn Acreage Figure Likely Too Low, Tierney Says
The nation’s farmers may wind up planting nearly 2 million additional acres to corn than the government predicts as high grain and land prices spur more seedings in areas where the crop is not traditionally grown, according to veteran market consultant Bill Tierney.
The northern U.S. Plains “could be the principal beneficiary of a bit more acres” in corn, Tierney said during an April 3 conference held near downtown Chicago. Additionally, the amount of idled land - so-called prevented-plant – may fall even more than government numbers imply, he said, and still-robust land prices are another factor.
“Farmland to too expensive to intentionally leave idle,” added Tierney, who is chief economist with Chicago-based AgResource Co.
In a March 31 report, the U.S. Department of Agriculture estimated 2014 corn plantings at 91.7 million acres, down 3.9% from last year and the lowest since 2010. Nationwide soybean seedings were pegged at 81.5 million acres, up 6.5% from 2013 and an all-time high, the agency said in the report, its annual Prospective Plantings forecast.
Expectations for higher soybean acreage this year partly reflect a recent price rally that appears to make the crop more lucrative for many farmers compared to other crops, corn in particular.
The soybean-to-corn ratio, which reflects the relative returns for each crop, is a historically-high 2.8 for the 2014-15 marketing year, based on the USDA’s projections for average farm prices. For 2013-14, the ratio is currently about 2.1. A higher ratio is typically viewed as an indication that soybeans are more profitable.
Prices for both crops have climbed in recent weeks, shaking out of a winter slump amid strong export demand.
In trading April 4, November soybean futures on CME Group in Chicago rose 5 cents to settle at $12.08 ½ a bushel, up 6.5% from $11.35 at the end of last year. December corn climbed 5 ¼ cents to settle at $5.06 ¾ a bushel, the highest closing price in nearly seven months.
Still, grain prices may be heading lower again eventually, given the prospect that near-record crops will boost supplies, Tierney said during a presentation at the conference, which was sponsored by MDA Weather Services.
U.S. farmers may harvest 13.87 billion bushels of corn this fall, Tierney estimated, down slightly from a record 13.92 billion bushels last year. He projected an average nationwide yield of 165.5 bushels an acre, up from 158.8 bushels an acre in 2013 and an all-time high.
Corn stockpiles at the end of the 2014-15 marketing year could balloon to more than 2.1 billion bushels, Tierney said. That’s up nearly 45% from the 1.46 billion bushels the USDA estimated will be on hand at the end of 2013-14.
July corn futures – currently at $5.07 ½ a bushel - may drop to a spring low of around $4.50, or even lower, Tierney said.
Lance Honig, a USDA statistician who also spoke at the conference, pointed to a “huge swing” into soybean acres from corn. “That’s probably the biggest story in the report,” he said. Soybeans “blew the previous record out of the water.”
The USDA compiles its Prospective Plantings estimates by surveying more than 84,000 U.S. farmers over the phone and through standard mail from late February through mid-March. Honig noted the USDA’s response rate for the survey has declined slightly from a historical average of about 80%.
That possibly reflects an increasing number of private forecasters who are also calling on farmers for estimates on acreage and other information.
Farmers are “getting a large number of visits and phone calls, and it’s starting to weigh on them,” Honig said. “It’s making it more challenging. The most common response is, you call me too much.”
Honig said the USDA is applying different survey methods aimed at boosting the response rate. Asked about what kind of impact a lower response rate may have on the accuracy of USDA forecasts, he declined to provide specific figures.
“The more data you get, the better the estimates you get,” he said. “Any type of decline can have some impact.”
Editor's note: Bruce Blythe, a freelancer for Agriculture.com, contributed this report.