U.S. Planted Acres May Rebound
- The chairman of the USDA’s World Agricultural Outlook Board expects record acreage of major field crops next year.
- Corn and soybean prices are both profitable for US producers at current levels following a recent rally supported by Chinese demand.
- In its monthly report last week, USDA nearly doubled its forecast for Chinese corn imports in 2020/21 to 13 million tonnes.
- USDA left its forecast for Chinese soybean imports at a record 100 million tonnes.
- US corn and soybean futures have risen to new contract highs.
- Soybean prices are at the highest in over four years while corn has not been this high in more than a year.
- In initial projections earlier this month, USDA forecast soybean planted area would increase from 83 million acres this year to 89 million in 2021/22.
- The baseline projection for all wheat area was increased to 46 million acres from 44.3 million this year
- Corn acreage next year was forecast slightly lower at 90 million acres compared to 91 million this year.
FBN’s Take On What It Means: China demand is expected to continue to be robust. If favorable prices continue and spring weather allows, U.S. producers are expected to make every effort they can to plant every acre they can. If more acres are planted, it would likely weigh on deferred prices.
China May Continue to Buy Corn
- Over the last 40 years China’s domestic consumption of corn has exceeded production about 30% of the time according to a University of Illinois study.
- 2017–2020 is the second longest stretch of under-production during that span.
- During the current period, the average shortfall has been 590 million bushels per year, or 6% below average annual production.
- Growth in consumption along with a small decline in average harvested acres and yields that were slightly but consistently below trend are to blame.
- It is often argued that China is cultivating most of its potential crop acres.
FBN’s Take On What It Means: If yield trends persist China will need to increase corn acres or imports to keep up with growing consumption. However, shifting acres to one crop will likely increase imports of another crop. We would look for China’s demand for corn to continue and be supportive of world prices.
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