Corn to take a leading role as farmers chase high commodity prices
Lured by two years of strong market prices, U.S. farmers will expand crop plantings significantly in 2022, with corn area rising by 3% despite sharply higher fertilizer costs, said economist Scott Irwin of the University of Illinois on Monday. This stands in contrast to many other early projections that say farmers will shy away from corn, the most widely grown crop in the country, in 2022 because of higher input costs and put more land into crops such as soybeans, wheat, and cotton instead.
During a webinar, Irwin estimated corn would account for 2.7 million acres of an overall increase of 7 million acres in crops next year. Irwin said his analysis was based on past responses by growers to fluctuations in commodity prices. “I think it will cause some discussion,” he said, because his results differed markedly from other forecasts, including USDA projections released in early November.
Corn plantings would total 96 million acres, an increase of 2.7 million acres from this year, and soybean plantings would decline by 1.7 million acres, to 85.5 million, said Irwin. By contrast, a handful of early forecasts say corn plantings will drop to around 92 million acres while soybean area expands modestly.
With normal weather and trend-line yields, the 2022 corn crop would be a record-shattering 15.9 billion bushels, nearly 800 million bushels larger than the record set in 2016, according to Irwin’s projections. The season-average price for corn would fall by more than $1 a bushel as a result of the mammoth crop. This year’s crop is forecast to average $5.45 a bushel, the highest price in nine years.
Corn and soybeans are the giants of U.S. crops, accounting for more than half of the land planted to the two dozen “principal” crops. Along with wheat, they form the foundation of the food supply; used as ingredients in foods such as bread and breakfast cereal or fed to livestock and poultry to produce meat, dairy, and eggs for consumers.
Although fertilizer prices have soared this fall, corn is likely to be more profitable than soybeans for Midwestern farmers in 2022, according the Farmdoc Daily blog in late October. The cost of fertilizer for corn was expected to run roughly $100 an acre higher than this year. But fertilizer costs per acre for soybeans were also on the rise, said Irwin, so the dynamics between the crops were not likely to change greatly.
Also on Monday, economist David Widmar said fertilizer prices might not be the determining factor. “The 2022 acreage debate will be more complicated than just fertilizer prices … reality is much messier,” Widmar wrote at the Agricultural Economic Insights blog. “It’s entirely possible that changes in wheat, cotton, or prevented plant acreage could be a bigger factor in the allocation of corn and soybeans than fertilizer prices.”
Winter wheat, the dominant U.S. variety, could be the underdog of the acreage debate, he said. A decades-long decline in plantings of the crop reversed last year, and world demand for wheat is high. “Early signs suggest winter wheat acreage could expand again in 2022,” wrote Widmar. “Additional acres planted to wheat could limit an expansion of corn and soybean acreage in 2022.”
Irwin spoke on a webinar that was part of the online Illinois Farm Economic Summit.
A video of the webinar is available here.