Prices in agricultural commodity markets are the result of decisions made by many different actors. The decisions made by farmers with their planters and drills are likely to be one of the largest influences on prices over the next two or three months. As the weather warms and spring planting begins in earnest, markets will search for any and every indication of farmers’ acreage allocation decisions for 2017. For example, some market observers will be actively following the Twitter hashtag #plant17 for signs of planting progress and entertaining planting videos:
— Allen Meissner (@bigaljack) February 28, 2017
Last week, the US Department of Agriculture put out its initial expectations for 2017 US crop acres at its annual Agricultural Outlook Forum in Washington, DC. These acreage numbers are part of early supply and demand estimates for the 2017-18 marketing year for wheat, corn, and soybeans. Broadly speaking, USDA expects more soybean acres and fewer wheat and corn acres, as shown in the table below. USDA projects 88 million acres of soybeans in 2017, nearly equal to the estimated 90 million acres of corn. This would be a record for US soybean acres and the highest ever level of soybean acres relative to corn acres.
Acreage projections for the Northern Great Plains
As we at AgEconMT have discussed before, the USDA is also projecting lower US wheat acres. In its earlier winter wheat seedings report, USDA estimated only 32.4 million acres of winter wheat were planted last fall, the lowest since 1909. Comparing this number with the current USDA estimate for all-wheat acres above suggests that planted acres for hard red spring (HRS) and durum wheat will be up about 250,000 acres to approximately 13.6 million acres. Maintaining status quo levels for HRS and Durum acres is not surprising for two reasons. First, there remains a substantial (but shrinking) premium between new-crop HRS wheat futures prices and hard red winter wheat futures prices. Today, the September 2017 Minneapolis Grain Exchange HRS contract closed today at about $5.60/bu, or $0.71/bushel above the Sept 2017 Chicago Mercantile Exchange HRW futures contract. Second, US HRS and durum acres are mainly located in the Northern Great Plains where wheat has limited alternatives in many crop rotations.
In the Northern Great Plains, given basically flat wheat acres, the other major acreage unknown is pulses: peas, lentils, and chickpeas. The USDA did not hazard a guess about pulse acres, but some signs point to more US pulse acres in 2017. Most importantly, few crops project significant profits at average yields and expected prices, but lentils and chickpeas look like potential money makers. Rotational constraints almost assuredly limit farmers intentions to plant lentils and chickpeas; growers need to plant cereals and oilseeds to mitigate disease cycles that affect peas and lentils. Given these factors, I am on record suggesting a modest 10% increase in lentil acres.
A small increase in US pulse acres is unlikely to be a big story in global pulse markets. The outcomes of the current winter season pulse harvest in India, acreage decisions in Canada, and anticipated Indian restrictions on pulse imports from both Canada and the US related to methyl bromide fumigation are likely bigger market-moving stories going into 2017.
It’s probably wise to take any early estimates for 2017 acres as rough guesses, not gospel – there can be substantial variation between the USDA’s February outlook forum acreage estimates and the results of the USDA Prospective Plantings report which uses a larger farmer survey to forecast planting intentions. We’ll revisit the story of #plant17 after March 31 when that report comes out.