USDA Plantings Preview: US soybean acreage to overtake corn

The USDA on Thursday is expected to formally state that the 2018/19 harvest will be the first in 35 years that soybean planting will overtake corn, according to analysts.

In its Prospective Plantings Report, the USDA is expected to state soybean acreage will hit a historic high and finally overtake corn plantings due to improved soy margins.

“Soybean stocks could be record large and soybean acreage could be record large. We are expecting, or at least the trade is expecting, that the corn acreage will be down on last year and soybean will be up,” Bill Tierney, chief economist of AgResource, told CME Market Movers.

An average of analyst expectations suggests that the trade is expecting plantings to be just over 91 million acres for soybean, up marginally on the 90.1 million acres planted in 2017 and on the 90 million acres the USDA said last month.

The increase in soy plantings come at a cost for corn, continuing its downward trend started in 2014, when corn acreage experienced its first losses to soy.

An average of analyst expectations suggests that the trade is seeking corn plantings to be just over 89.42 million acres, down from the 90.17 million acres planted in 2017 and on the 90 million acres the USDA said last month.

The switch to soybeans comes at a time of soybean futures prices soaring due to a poor Argentinian harvest, with production expected to fall by more than 30% to around 40 million mt or lower.

And the figures, if correct, show that the prospect of higher prices have trumped farmer fears China will target soybeans in its trade spat with the US.

“Clearly there is a potential, and I emphasise potential, for a catastrophic impact, a negative impact on soybean prices should China impose a significant tariff, but most people don’t think that is going to happen," Tierney said.

Stocks

Both crops are expected to see a large cut in their stocks since the USDA last estimated them in December.

Corn stocks are expected to fall 30% from 12.516 billion bushels to 8.703 billion bushels (221 million mt), the market survey showed, but remain up 1% from March 2017.

Meanwhile soybean stocks are expected to fall by 36%, losing 1.127 billion bushels since December’s level to 2.030 billion bushels (55 million mt), but will remain above the level of 1.74 billion bushels this time last year.

Wheat plantings

Market analysts seem split over 2018 total wheat plantings, with forecasts ranging wide from 43.9 million acres to 47.2 million acres, compared to last year’s final figure of 46.012 million acres.

The average expected acreage comes in at 46.297 million acres, marginally above last year’s multi-year low.

Most notably, expectations for winter wheat plantings are expected to fall further from last year’s final plantings of 32.696 million acres, a multi-decade low.

Spring wheat seems to be the winner, growing from last year’s final of 11.009 million acres to analysts’ average of 11.5 million acres.

Wheat stocks at the end of March are expected to come in at the second highest volume recorded during the last two decades, after last year’s multi-year high, to just under 1.5 billion bushels, as corn remains a cheaper feedstock.

"Given HR wheat’s recent 25-40% price premium to corn in the SW, very limited wheat feeding by feedyards has and will likely occur," Jerry Gidel from Price Group said in an update, while "US wheat milling and food demand has been relative stable on a yearly and quarterly basis."