The latest United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report was released last week, but being at the end of the cycle, very little has changed. It is a new crop the market is now interested in, and the USDA Prospective Plantings report can give an idea of where supply is headed.
The USDA Prospective Plantings report was released at the end of March, and it got a little lost in the storm of news regarding tariffs.
While winter wheat is in the ground, plantings of corn, soybeans, and spring wheat can quickly change with movements in markets and seasons. As of last week, 2% of US corn was planted, and 3% of spring wheat. Soybean plantings are yet to be reported in the USDA crop progress report. Both corn and soybean planting windows close in mid-June, so there are two months for things to change.
Regardless, we’ll take a look at the end of March prospective plantings. Figure 1 shows how much area the big three commodities are expected to take up in the US this year.
The USDA is expecting a big swing to corn this year, at the expense of wheat and soybeans. Corn plantings are forecast to increase by 5.3% to hit their highest level since 2012. To make room for corn, wheat plantings are down marginally, by 1.6%, and soybeans markedly, by 4.3%.
Usually, at this stage of the season, it’s the price that decides what goes into the acres that are swinging between corn, soybeans, and spring wheat. Figure 2 shows CME wheat, corn, and soybean futures for the past 11 years.
The big jump in wheat plantings in 2023 can be put down to the conflict in Ukraine and higher wheat prices relative to corn and soybeans.
This time last year soybeans were priced at a 260-270% premium to corn. Both corn and soybean prices declined during harvest. While corn has rallied back toward 500¢/bu, soybeans remain around 1,000¢/bu, a 210-220% premium to corn. Hence the move towards more soybean acres and less corn.
What does it mean?
These big-picture numbers can impact prices here. Corn drives the global feed market, while soybeans set the direction for oilseeds. A stronger corn crop and a weaker soybean crop would put pressure on feed barley and wheat here, and provide support for canola.
Key Points
- The USDA Prospective Plantings report shows more corn going in at the expense of soybeans.
- US Wheat acreage is expected to be down slightly from last year.
- Plantings are positive for canola prices, but bearish for feed grains.
Click on figure to expand
Click on figure to expand
Data sources: USDA, Refinitiv, Mecardo
