More soybean acres. Fewer acres of almost every other crop. That seems to be the mantra of farmers as we head into the 2017 growing season. Most analysts, including the USDA, believe farmers in the U.S. will plant four to five million more acres to soybeans this spring. The consistently firm-to-strong soybean market — despite record U.S. and world crop production — has been impressive. New-crop soybean futures remained above the $10.00 level throughout the winter. More importantly, the Federal crop insurance minimum price for soybeans will be $10.19 per bushel. That compares to the initial 2016 soybean price of $8.85/bu.
We already know that winter wheat farmers cut their acres by 3.2 million from 2016. That amounts to the smallest winter wheat acreage in more than 100 years. We anticipate that spring wheat acres will also decline by one million acres or so. Much of the lost spring wheat acreage will go to soybeans. The minimum spring wheat crop insurance minimum price is $5.65, compared to $5.13 last year.
Corn planted acreage appears headed for a decline of at least four million acres. Most of the lost corn acres also will go to soybeans. The 2017 corn crop insurance minimum price will be $3.96. It was $3.86 in 2016.
Barley acres will lose ground in 2017 as well, as malting contracts are few and far between and new-crop prices well below last year. Pulse crops will absorb some of those lost barley acres in the northern and western parts of North Dakota.
What about sunflower acres? We expect they will also drop in 2017, maybe by as much as 10 to 15%. This expected reduction in sunflower acreage might start to create some unexpected opportunities as we look ahead. That might especially be the case with nonoil or confection sunflower. The 2017 confection sunflower crop insurance minimum price is 27.2 cents/lb. That compares to 26.7 cents in 2016. The 2017 oil sunflower crop insurance minimum price is 18.2 cents/lb. That compares to 16.9 cents last year.
The numbers below show the dramatic decline in nonoil sunflower acres in the U.S over the past five years:
US NonoilSunflower Planted Acres
The USDA will release their planting intentions report on March 31. This report will estimate planted acres of all spring-planted crops. It will be based on actual farmer surveys that were completed in early March.
Nonoil sunflower acres in Canada have also been on the decline. The accompanying chart shows Manitoba oil and nonoil sunflower acres since 2001. More than 80% of Canada’s sunflower acreage is in Manitoba.
The USDA held their annual outlook conference in late February. This is the meeting where they take their first glimpse at potential supply and demand outlooks for the 2017/18 marketing year as well as update their 10-year baseline projections. The interesting number in their 2017/18 outlook was that they left soybean ending supplies unchanged at the end of the next marketing year despite a projected four-million-acre increase in soybean acres. That is a testament to the continuing expansion in demand for soybeans. The demand growth is still being led by China.
The other significant change in the 2017/18 U.S. outlook is that ending supplies of wheat are expected to drop dramatically from the current year. A four- to five-million acre reduction in planted area, coupled with yields falling from last year’s all-time record, could reduce total U.S. wheat production by 500 million bushels. That is a big drop and is based on a normal yield outlook. The hard red winter wheat crop broke dormancy about 30 days earlier than normal. It has been warm and dry across the Southern Plains. Yields will be smaller than currently projected unless more-favorable weather arrives.
Prices, in the final analysis, will be determined by summer weather and yields around the Northern Hemisphere. Very early weather forecasts look for above-normal temperatures and normal precipitation across most of the country.
Corn can absorb some yield reduction because ending supplies exceed two billion bushels. Any threat to soybean yields will bring a prompt response from the soybean market. Wheat could be the “sleeper” market in 2017 because of the sharp drop in U.S. ending supplies. The confection sunflower market could also get interesting very quickly because of the expected decline in acres to their lowest level in years.
These same weather and yield thoughts extend to Canada, Europe and the Black Sea region. The world has enjoyed four consecutive years of record crop production. This has masked record consumption. Can we produce five record world crops?
* Mike Krueger is owner of The Money Farm, a Fargo, N.D.-based grain marketing consulting firm. While the information in this article is believed to be reliable, marketing involves risk, and the author and The Sunflower assume no responsibility for its use.