As of late there have been some changes to the crop acreage reports. Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson joins host Dave Deeken this weekend on SUNUP to explain what is causing these adjustments and the reshuffling of acres planted and what impact that is having on commodity prices here in Oklahoma. According to Anderson, the big picture here is the price relationships between our major crops like wheat, corn, soybeans, sorghum, etc.
Anderson explains that when looking back over the better part of the last decade, wheat for instance has not been near as profitable as other crops that have slowly gained in popularity. However, profits have leaked away, and farmers are now gravitating toward other options in search of more sustainable profits. That fact is reflected in the numbers as reported by the USDA.
This is evident enough in consideration of just one year ago when producers planted 350,000 acres of corn in Oklahoma. This year, that number is down to 310,000. Sorghum acres have seen a sharp uptick this year at 400,000 compared to last year’s 315,000. Soybean acres rose by a relatively modest 5,000 from 655,000 to 660,000 this year. Cotton planted acres skyrocketed dramatically up from 585,000 to 720,000 and wheat acres dipped slightly again this year by 100,000 acres from 4.5 to 4.4 million acres. To put that into perspective, wheat’s average planted acres in Oklahoma has been roughly 5.1 million acres, but again have fallen due to pressures from lack of profitability.
Given production in Oklahoma, the impact that these adjustments have had on the price of wheat, Anderson says is largely insignificant. However, when considering the broader impact that price relationship has had on other commodities, we can see a ripple effect.
Anderson says the price of corn has been on a steady decline for several months now, having fallen near a dollar to about $3.20 currently. Sorghum is nearby that at $3.25 depending on the location. Soybeans have become subject to heightened volatility and speculative talk, partially due to a record year for soybean production but also trade tensions and tariffs from China. USDA in its latest World Agriculture Supply and Demand Estimates report brought the price of soybeans down from right at $10 to $9.25. Cotton, however, seems to be the crop offering the most profitability, currently at $0.884 on the December contract with a projected price for next year by the USDA at $0.75. But, to earn that price, Anderson warns farmers must first get good production out of their crop.
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