It’s time to stop looking back. 2023 was an unmatched year in terms of North American grain production, and those huge corn and soybean yields have had a significant impact on prices, but that’s all behind us now. There is nothing left to learn about last year’s crop. All of the uncertainty in the agricultural commodities market resides in the 2024 crop.
As we move through February and March, one of the big topics of conversation and debate is seeding intentions for the upcoming crop year. Obviously, the number of acres being planted to corn, soybeans, or other crops is the biggest factor in how large the 2024 crop size might potentially be. Equally important is the fact that if production acres are lower, then yield is even more important to ensure that the marketplace has adequate supply. If we come in with lower seeded acres of a particular crop, then the market prices will be more volatile as they react to weather concerns throughout this spring and summer’s growing season.
There is still a lot of time for grain producers across the continent to change their minds about the crop plans for 2024, and still a few months before weather challenges in the planting season might force farmers to change their plans if wet fields force a later seeding window. Various organizations start forecasting seeding intentions throughout the winter time and we never know how big the crop’s footprint is going to be until the end of June.
From late February until the USDA’s seeding intentions report at the end of March, we can look forward to a series of different analyst agencies reporting on 2024 crop seeding plans and the futures market is apt to react to most of them, especially if some of the acreage forecasts fall outside of the expected range. Of course people’s plans come second to what nature actually allows us to do.
The first of the noteworthy reports on American farmers’ planting intentions for 2024 is produced by an organization called Farm Futures, which publishes their early forecast at the end of January. It is based on the results of a survey of farmers conducted in January and for 2024 it suggested a 1.1 % decline in U.S. corn acres from 2023’s crop size; a 2.3 % increase in soybean acres and a 5.8 % increase in wheat acres.
We need to give Farm Futures a lot of credit for having the nerve to report first, but also respect the fact that this survey was conducted before the deep and extended harvest lows that we’ve seen in cash grain prices, that started well after this survey was conducted. Corn futures have dropped more than 10 % of their value, since this study group was surveyed and they were already suggesting a decline in corn acres.
The breakdown in corn values would suggest that estimates of 2024 crop planting intentions will show deeper reductions to corn planting based on market conditions at the time that the estimates were made. And that’s exactly what we are looking forward to learning at the USDA’s annual Outlook conference in mid-February. Economic modelling in early January suggests that the USDA will forecast a 3.4 million acre increase in soybeans and a 3.1 million acre reduction in corn planting for 2024.
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