Weak prices discourage acreage expansion

Farm Futures' survey shows more corn, less soybeans for 2016.

Low prices and poor profit margins should keep expansion plans by most growers under wraps for 2016, according to Farm Futures’ latest survey of planting intentions.

While Farm Futures found farmers ready to boost corn acreage this spring, the increase is modest, at 89.5 million. That would be a 1.7% increase from 2015, which was reduced substantially by bad weather, but 1.1 million acres below levels achieved in 2014.

Growers told Farm Futures they plan to cut back on soybeans, with intentions to plant 82.2 million acres, about 500,000 below 2015. While flooding also set back soybean seedings in 2015, economics may keep growers from taking another crack at soybeans with that ground.

“Neither corn nor soybeans is showing a profit based on current 2016 crop prices, but corn has better potential to break even this year,” said Bryce Knorr, Farm Futures senior grain market analyst. “Farmers are beginning to recognize this, even though corn will require more cash flow in a tight year to plant due to higher production costs.”

Those tight margins should keep farmers from boosting overall acreage much, said Knorr, who expects more land to go into forage crops or lay fallow unless markets improve.

One big question facing the markets is what will happen to winter wheat ground that wasn’t seeded last fall. On Jan. 12, the U.S. Department of Agriculture reported a 2.85 million-acre drop in seedings. While growers in the Midwest boosted acreage, wet weather kept farmers in the South from putting in fields. Low prices appeared to discourage farmers on the Plains from sticking with wheat.

The Farm Futures survey suggested that farmers on the Plains will favor corn over soybeans, if they have water available either through rainfall or irrigation. But Plains farmers appear ready to hit the pause button on sorghum expansion, after they rushed to plant that feed grain in 2015. Farm Futures estimated that sorghum acreage could fall 2.5% to 8.25 million in 2016.

"Sorghum’s premium to corn soared to record levels in 2015 after China began buying, but increased production swamped demand, and sorghum is trading at a weaker-than-normal discount to corn in many areas on the Plains,” Knorr said.

Spring wheat seedings could see another year of modest expansion this spring. The Farm Futures survey put acreage on the Plains up less than 100,000 to 13.3 million. With durum acreage also rising, that could leave total wheat acreage at 52 million, down almost 5% from 2015.

Farm Futures surveyed more than 1,550 growers from Dec. 7 to Jan. 4. Farmers from all over the country were invited by email to complete the survey online.

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