When U.S. farmers bring their crops to market this year, they will see “the beginning of gradual price increases that are expected to continue through the decade,” ending the slump that began in 2013, said USDA projections. Prices for most crops will remain below their 10-year average, however, and to maximize returns, farmers will plant more soybeans, making it the No. 1 crop, while planting less corn and wheat.
“These projections are the first in history where soybean acreage is expected to eclipse corn acreage,” said the USDA in its 10-year projections of U.S. and world agriculture. Last November, the agency released a slimmed-down version of its “baseline,” which also projected that soybeans would consistently outpace corn as the most widely planted U.S. crop through 2027. Growers are expected to plant 91 million acres of each crop this spring, after which soybeans would then take the lead in plantings. The projections were based on weather and market conditions last fall and will be updated at the USDA’s Ag Outlook Forum next Thursday and Friday.
The end of “king corn” would profoundly change the traditional lineup of the four major U.S. field crops — corn, soybeans, wheat, and cotton, which covered 239 million acres last year, an area more than twice as large as California.
“Sustained increases in yields keep total production increasing, even for corn, which is expected to lose the most acres over the next decade,” said the USDA, referring to the eight leading U.S. crops: corn, soybeans, wheat, cotton, rice, sorghum, barley, and oats. Soybean plantings are expected to be in the range of 91 million to 92 million acres a year through 2027, while corn plantings will decrease to a projected average of 87.5 million acres.
“Food and feed grain prices are expected to have bottomed out by marketing year 2017/18,” said the USDA, referring to the current year, which ends with the new harvest. “Marketing year 2018/19 marks the beginning of gradual price increases that are expected to continue through the decade.” Corn prices are projected to rise by 30 cents a bushel through 2027, soybeans by 40 cents, and wheat by 60 cents. Despite the recovery, corn prices would be just half of the record $6.89 a bushel paid in 2012, at the peak of the commodity boom. Wheat and soybean prices in 2027 would be two-thirds of their 2012 records.
“Prices for most crops remain below their 10-year averages,” said the USDA in describing the economic assumptions that shaped its projections. “Prices are expected to be lowest in the beginning of the projection period and thereafter rise moderately, reflecting long-term growth in global demand for agricultural products and continued biofuel feedstock demand.”
Last week, USDA economists forecast net farm income this year of $59.5 billion, half of the mark set in 2013 and the lowest total since 2006.
The strong dollar will dampen the growth in U.S. export volume, but the United States will remain competitive in the world market, said the USDA baseline document. “While exports are projected to rise, contributing to long-term increases in cash receipts for U.S. farmers, the United States is still expected to lose global market share due to increased global production.”
The only time soybean plantings exceeded corn plantings was in 1983, when the Reagan administration’s Payment-in-Kind (PIK) program reduced corn acreage by 30 percent, to 60.2 million acres compared with 63.8 million acres of soybeans. PIK was created in reaction to a record-large 1982 corn crop and surpluses of other crops. Under PIK, the government gave surplus commodities to corn, wheat, and cotton growers who idled cropland beyond the amount required when they signed up for crop subsidies.
Wheat sowings are projected to be the smallest on record this year — 45 million acres, down by 1 million acres from 2017, which was the smallest acreage since the USDA began tracking all-wheat area in 1921. Large supplies worldwide are limiting the demand for U.S. wheat. In January, a USDA survey of growers pegged winter wheat plantings at 32.6 million acres, the lowest total in 109 years. Winter wheat, grown mostly in the Plains, dominates U.S. wheat production.
The USDA projected that plantings of upland cotton would drop to 11.2 million acres this year, down by 1.2 million acres from 2017, in the face of declining market prices. Plantings are not projected to top 11 million acres again until 2024. The National Cotton Council is more optimistic, based on a survey of growers that ended in mid-January. It forecasts upland cotton plantings of 12.8 million acres this year because of rising global demand and weak prices for alternative crops.
Corn, soybeans, and wheat are the foundation of the U.S. diet. The crops, particularly wheat, are consumed directly as food, processed into ingredients for food, and used in rations for food animals. The crops are also used by industry for an array of other products, including biofuels.