June 2018
The Business of Farming

Prospective Plantings

 

The United States Department of Agriculture, National Agricultural Services’ "Prospective Plantings" was released at the end of March. It shows the projected acres U.S. farmers intend to plant in major crops in Alabama and the United States (Table 1). The reality is that actual acreage will vary from these projections, but it is an indication of the mindset of production agriculture. Changes in commodity prices, inputs, trade, etc., combined with weather events may have significant effects on the crops that go in the ground.

Closing prices for corn and soybeans were up across the board after the Prospective Plantings report was released. The predicted acres being lower than 2017 acres were viewed as bullish or positive for those commodities.

Many analysts develop their own reports for various entities invested in agricultural commodities. The average from the analysts’ prereport estimates was higher than USDA predications and was reflected in the market reaction.

In Alabama, soybeans acres were predicted to be the same as 2017, while corn acres were projected to be up 4 percent and cotton up 8 percent. Peanuts acres were the big loser in both Alabama and the United States, coming in with 18 percent fewer acres. Were these predictions a surprise?

The March Grain Stocks report was also released about the same time as the Prospective Planting report. The Grain Stocks report indicated that both corn and soybean stocks were larger than expected. 2017 displayed record production for U.S. soybeans and a large corn crop, so increased stocks are not surprising.

For 2017, Alabama yields were at or near record-setting for most commodities. USDA-NASS estimates Alabama’s corn yield was 167 bushels per acre and soybean yield of 46 bushels per acre. These were the highest average yields ever for the state. Peanut yields were second highest and cotton was third highest for the state. It was a very good year for Alabama crops. These high yields helped Alabama producers overcome relatively low commodity prices.

What can we take from these reports? First, remember that Alabama producers have an advantage over Midwest growers in that we have a diversified portfolio of crops we can grow. Corn, cotton, and soybeans are grown statewide, and peanuts are being grown over a larger portion of the state. In the Midwest, primarily corn and soybeans are produced. From a recommended best management practice, we need to remember our crop rotation plan and try to maintain it.

A quote comes to mind from one of our better producers, who said, "Don’t sacrifice long-term agronomic goals for short-term profits."

Crop rotations provide many benefits, but need to be evaluated periodically to ensure they help you meet long-term agronomic goals and make it as profitable as possible.

Total U.S. acreage for the principal crops is close to last year’s, and we can only guess what the 2018 yields may be. With the carryover stocks we have, anything near normal yields will keep price at current levels or below. It is important for producers to estimate their cost of production to make the best decisions for their operation. Last year, our high yields helped to offset low commodity prices, but it is unlikely record-high yields are sustainable.

How will your operation be impacted by yields returning to normal, combined with low commodity prices?

The next report related to U.S. acreage will be in USDA, NASS’s "Acreage," to be released June 29, noon EST.

 

Max Runge is an Extension specialist with Alabama Cooperative Extension System.