WASHINGTON – USDA?s latest acreage projections for 2015 paint a somewhat different picture than what analysts were thinking. Some of the biggest news to come out of USDA?s Ag Outlook Forum last week was an initial acreage projection for U.S. cropland this year.
Corn acres were forecast at almost 1.5 percent below last year, at 89 million planted acres. Industry forecasts ahead of the forum placed soybean acres at 88 million, but USDA economists pegged beans at 83.5 million acres in 2015.
Bloomberg News Correspondent Alan Bjerga says the forecast suggests acreage in general is going down, due in part to low commodity prices. ?Where are you going to go? ,” he asks. “I mean, what are you going to plant that?s going to give you some profitability? Soybeans are less of a safe haven than they used to be. Corn, wheat and cotton are not as attractive as they were. Once you get past that, there are a lot of swaths of the country where there really isn?t a lot of infrastructure for anything else, and it?s certainly having an impact on farm profitability this year.?
Analyst Don Roose with investment firm U.S. Commodities in West Des Moines described the projections as “sobering,” noting that the market last week had been handcuffed to news from the Ag Outlook Forum.
“We’re looking at a cash price next year of $3.50 per bushel,” Roose explained. “The corn market really has been trying to buy the corn acres, and thinks we need 89 million acres, maybe a little bit more.”
A burdensome South American harvest has some producers rethinking soybean acres this year, but “soybeans still have a pretty compelling argument, just because the input costs are lower,” says Bjerga. However, considering that the projections are being released in February, he also believes it?s worth taking USDA numbers with a grain of salt.
?They haven?t actually talked to any farmers yet,” Bjerga notes. “You know, at the end of the March, when you have USDA?s prospective plantings report, which is based on extensive field surveys, now you?ve got something. And a lot of analysts, folks from Morgan Stanley, for example, are already saying ?You know, there?s no way that this is what it?s going to be in the end, because there is still compelling case for soybeans. These acres have to go somewhere. They?re not just all going to go fallow or into CRP.? So at some point there?s going to be a shift from what USDA is saying.?
To hear more insights from Bjerga on USDA’s acreage forecasts, click the audio player above this story.
