Author: J. Mark Welch

With planting season underway across much of the South, and soon across the Corn Belt, one of the major questions that will impact price direction is planted acreage.  At the Agricultural Outlook Forum (AOF) in late February, USDA projected corn area planted at 94.0 million acres, up from 90.6 million in 2024 (Figure 1). The increase in acres from 2024 to 2025 was not a surprise given recent strength in corn prices relative to that of soybeans. But, the magnitude of the increase relative to trade expectations can have an impact on futures prices. 

Additional information on farmer planting intentions will be released in the March 31 Prospective Plantingsreport. This survey is administered by the National Agricultural Statistics Service (NASS) during the first two weeks in March. The next official report of planted acres is the Acreage report of June 30, an additional farmer survey of actual crop acres planted (and remaining intended). 

Acres planted is a fluid variable with estimates moving from USDA’s model-based projections (February Outlook) to late-winter farmer intentions (March Prospective Plantings) to area actually planted (June Acreage).  Shifts in futures prices as we move from winter to spring offer some indication of what to expect in forthcoming reports. 

First, is the relationship between the numbers of the Outlook forum and the prospective plantings survey. In the 29 years since 1996 (the Freedom to Farm era, which moved away from acreage restrictions to greater flexibility in farmer planting decisions), farmer planting intentions were lower than the acreage number presented at the Outlook Forum 17 times (59%); while 12 years were higher (41%). The average for all years is 184,000 acres less of actual planted acreage compared to the Outlook forecast. Balanced against trade expectations, this would generally be seen as bullish for corn prices. 

Second, do changes in futures prices affect farmer planting decisions as we move from late winter to spring? Using monthly average inflation adjusted prices of the December corn contract, there is a positive relationship between price changes and acres planted (Figure 2). Years in which the December futures contract increased from February to April tend to be correlated with an increase in acres planted relative to intended. A decline in prices from February to April is associated with fewer acres planted than intended. A rough estimate of that relationship is that a one-cent change in price changes area planted by about 9,000 acres.^[1]

How does this information position us for the release of 2025 acreage numbers? First, the greatest likelihood is for corn acres intended to come in lower than the projections of the Outlook Forum (bullish). Next, at the time of this writing, the average 2025 December corn futures closing price in March is 451.77 compared to 469.67 in February. If this relationship holds, that is, if the average price in April is still below the February price, that suggests a further reduction in acres from intended to actual (bullish). 

Of course, a multitude of other supply and demand variables will ultimately influence the harvest price of corn. Extremes in the change in corn acres planted in response to price came in years of dramatic shifts in demand: 2007 (+2.4 million acres at the beginning of the biofuel era) and 2020 (-5.0 million acres, Covid). Developments related to tariffs and trade may be the catalyst for magnified response in the dynamics of price and acreage in 2025.  

Figure 1. U.S. Corn Acres: Agricultural Outlook Forum (AOF), Prospective Plantings (PP), and Acreage

Figure 2. Corn planted acres in response to a change in price

^[1] For more on farmers’ response to price shocks on planting decisions, see “Estimating Supply Elasticities for Corn in the United States: Accounting for Prospective Plantings”, Raghav Goyal, Michael K. Adjemian, and William Secor, AAEA, 2022.

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References:

USDA, NASS, Acreage. Available online at https://usda.library.cornell.edu/concern/publications/j098zb09z.

USDA, Agricultural Outlook Forum. Available online at https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/agricultural-outlook-forum

USDA, NASS, Prospective Plantings. Available online at https://usda.library.cornell.edu/concern/publications/x633f100h

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Welch, J. Mark. “Estimating Corn Planted Acres for 2025.” Southern Ag Today 5(13.3). March 26, 2025. Permalink

Updates in the October 2024 WASDE continued the overall fundamental market conditions in grains and soybeans (Table 1). Compared to the 2023/2024 marketing year, the factors of supply are increasing more than the factors of demand in 2024/2025. That results in an increase in the stocks-to-use ratio, measured here as estimated days of use on hand at the end of the marketing year [= ending stocks divided by (total use divided by 365)].  The days of use on hand measures how long we could get by next year on the crop that is left over from this year.  An increase in the number of days of use on hand indicates a larger supply cushion in case of a production shortfall, which puts downward pressure on prices. 

  Table 1. WASDE: U.S. Supply and Demand

Focusing more specifically on each commodity:

Corn. USDA increased the national average corn yield this month from 183.6 bushels per acre in September to 183.8, an all-time record high. The biggest changes to the supply and demand balance sheet came from increases in use in old crop, lowering the beginning stock number for the 2024/25 marketing year by 52 million bushels. Domestic use categories in new crop corn were unchanged, but USDA increased exports by 25 million bushels. 

World corn ending stocks were down slightly as the 1.6 million metric ton (mmt) increase in supply was exceeded by a 3.5 mmt increase in use. 

While the supply and demand numbers for corn were mostly neutral, the increase in use is a bullish sign. 

Wheat. The numbers for wheat in the October WASDE reflect crop information in the September Small Grains Summary: a small decrease in planted acres and yield. These changes lowered production slightly but were largely offset by an increase in imports.  The only change in use was an increase of 10 million bushels for feed.  

Only minor changes were made to estimates of world wheat supply and demand: supply down 1.9 mmt; use down 2.4 mmt; and ending stocks up 0.5 mmt.  

The report was slightly bullish for U.S. wheat with a small decrease in estimated ending stocks and a reduction in the days of use on hand at the end of the marketing year, down from a 154-day supply last month to 150. But the U.S. only accounts for 7% of the world wheat supply. The stocks-to-use ratio for world wheat this month was higher.   

Rice. Rice numbers were little changed this month, with a small increase in yield increasing supply and ending stocks. 

World rice production is up 3.1 mmt this month primarily due to an increase in India. The largest rice exporter in the world, India’s rice exports increased from 18.0 mmt last month to 21.0 mmt. This is the second highest rice export number for India, just below the record 22.0 mmt in 2021/2022.  

The report was neutral for U.S. rice supply and demand but bearish overall given the increase in foreign rice production with little change in use. 

Soybeans. The national average soybean yield was lowered by 1/10^th of a bushel to 53.1, still a record high. Along with this small change in production was a small increase in beginning stocks and small decrease in use. Ending stocks were unchanged. 

The world soybean balance sheet was mostly unchanged: supply down 0.2 mmt; use down 0.3 mmt; and ending stocks up 0.1 mmt.

With virtually no changes to U.S. or world supply and demand numbers, the October WASDE was fundamentally neutral for soybeans. 

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Welch, J. Mark. “Recap of the October WASDE for Grains and Soybeans.“
Southern Ag Today 4(42.3). October 16, 2024. Permalink

Gross Domestic Product (GDP) is likely the most closely watched and commonly cited economic indicator. GDP is “…the market value of all goods and services produced within a country in a given period of time” and is “…the best single measure of a society’s economic well-being” (Mankiw, 2007). While tracking and forecasting GDP is important for businesses, labor, investors, policymakers, and economists, it has important implications for the farm economy as well.  GDP can be thought of as how well off your customers are to buy the things you produce. 

The International Monetary Fund uses GDP to track global economic growth by country and country groups. Real GDP growth (adjusted for inflation) has exhibited interesting trends since 1980 that have implications for grain markets (Figure 1).  From 1980 to 2000, there was very little difference between growth rates of GDP between advanced economies (e.g., U.S., Japan, most of Europe, Canada, Australia, U.K), and emerging market and developing economies (e.g., Brazil, Russia, India, China, Mexico). Advanced economies grew at an average rate of 2.9%, with emerging market and developing economies growing by 3.5%. 

Figure 1. Global Economic Growth, real GDP, 1980-2029

In the early 2000s, world economic growth rates began to be driven by emerging economies. Gains in productivity, rising per capita incomes, and a growing middle class have made many emerging economies more competitive as suppliers to world export markets and increased the size of their domestic markets (Kose and Prassad, 2010). From 2000 to 2019, the growth rate of advanced economies was 1.9%, with emerging and developing economies growing by an average of 5.5%. 

Since 2020, economic growth rates in emerging economies have slowed. Global conflicts, trade tensions, inflation, and rising interest rates are a few of the factors cited for a slowdown in economic growth, factors that hit emerging and developing economies especially hard (IMF, 2024).  Estimates for 2020-2024 show advanced economies growing by an average of 1.5% and emerging and developing economies by 3.6%. Including forecasts by the IMF for the next five years, average GDP growth from 2020-2029 is projected to be 1.7% for advanced economies and 3.8% for emerging and developing. 

Figure 2. Real GDP growth in emerging and developing economies and world per capita grain consumption   

Trends in world grain consumption have shown significant changes since 1980 as well (Figure 2; blue line).  In 1980, consumption of barley, corn, millet, mixed grains, oats, rice, rye, sorghum, soybeans, and wheat was 348 kg per person.  By the end of the 1999/2000 marketing year, that number was down to 340 kg. Then, per capita consumption began to grow, reaching over 400 kg by 2019.  With increasing protein in diets and grain for fuel, the most recent estimate of world per capita grain consumption in 2024 is 410 kg. 

An overlay of GDP growth in emerging and developing economies and world per capita grain consumption shows the relationship between these factors (Figure 2). From 1980-1999, a period with little difference between growth in advance economies and emerging economies, GDP grew by 3.5% while grain use per capita fell by 7 kg (-0.4 kg/yr).  From 2000-2019, an era of globalization and expanding economic impact in emerging economies with GDP on the rise, grain use increased by 62 kg (+3.1 kg/yr). Since 2019, post-pandemic, with slower rates of growth in GDP, grain use has increased by 8 kg (1.6 kg/yr), about half the rate of growth of the previous 20 years. 

Per capita grain consumption is one measure of global grain demand. Even if per capita consumption is unchanged, growth in the population base would still mean an increase in grain consumption. In 1980, the world population was increasing by 1.6% per year. In 2000, population growth was 1.3%. That growth rate is down to 0.9% in 2024 and forecast to be 0.8% by 2030, half the rate of growth in 1980 (USDA, ERS, 2024).  

Important to levels of grain use are patterns of global economic growth, especially GDP growth in emerging and developing economies. As growth rates in this region slow down over the next decade, per capita grain use may yet increase, but at a slowing rate. 

The combination of slowing population growth and a slowdown in economic growth may alter recent patterns in world grain use.  That means gains in productivity (weather permitting) have a higher likelihood of exceeding gains in use. When that happens, that is a recipe for lower prices. 

References:

International Monetary Fund (IMF). World Economic Outlook, July 2024, http://www.imf.org.

Kose, M.A. and E. Prassad. “Emerging Markets Come of Age”, Finance and Development, Vol. 47, No 4, December 2010.

Mankiw, Gregory. Brief Principles of Macroeconomics, Fourth Edition, Thompson South-Western, Mason, Ohio, 2007.

USDA, Economic Research Service. “International Macroeconomic Data Set”, https://www.ers.usda.gov/data-products/international-macroeconomic-data-set/.

USDA, Foreign Agriculture Service. “Production, Supply, and Distribution (PSD) database”. https://apps.fas.usda.gov/psdonline/app/index.html#/app/home.

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Welch, J. Mark. “GDP and the Farm Economy.” Southern Ag Today 4(32.1). August 5, 2024. Permalink

A key component of any market outlook for agricultural commodities is the production forecast for the upcoming year. Estimates of crop area and yield are important market drivers. The 2024 March Prospective Plantings report (survey of producers’ acreage intentions for the upcoming season taken in late-February to early March) showed a decline in both wheat and sorghum acres compared to 2023. However, several other factors may come into play in 2024 that significantly impact the final production numbers.

First, final planted acreage numbers can deviate substantially from planting intentions (Table 1). Even in wheat, where the planted acreage number for winter wheat is pretty well known by early March, spring wheat acres account for about a quarter of the U.S. all-wheat planted area. Over the last 10 years, the final planted number for wheat compared to the prospective plantings survey has ranged from +1 million acres (2014) to -1.6 million acres (2022), and sorghum has ranged from +1.2 million (2023) to -500,000 (2016).  

Another factor impacting the production estimate is the percentage of crop planted that is harvested for grain. This is especially important in wheat and sorghum where major production regions are in the Southern Plains, areas prone to significant drought and weather impacts.  Over the last two years of drought, the harvested percentages of wheat and sorghum have been well below average. A return to average harvested percentage levels could result in planted acres being lower but harvested area increasing.

Related to the harvested area question is the yield potential of the upcoming crop. So far in 2024, national winter wheat crop condition ratings are well above last year and well above average(USDA, Crop Progress) . Better crop condition ratings bode well for an increase in harvested percentage as well as overall yield. This is notably the case in Kansas, the top wheat producing state.  The last time we saw wheat ratings this good in Kansas was 2016. That year set a record high wheat yield for Kansas (57 bushels) and the U.S. wheat crop (52.7 bushels).  The harvested percentage of acres planted that year was 88%.    

The 2016 crop season was under the influence of the El Nino weather phenomenon, as is 2024 (Figure 1).  The current El Nino is the second strongest event since the winter of 2015/16.  With current favorable crop condition ratings, wheat production in 2024 could be up significantly compared to 2023 despite a lower planted acres number.  

Interestingly, 2016 was also a record setting year for U.S. grain sorghum (Kansas is the number one producing state). The final yield that year was 77.9 bushels per acre on a harvested percentage of 93%.  

Using the planted acreage number from the Prospective Plantings report, average percent harvested over the last 10 years, and trend line yields, we project production increases for U.S. wheat and sorghum in 2024 despite a decrease in planted area (Table 2).  For wheat, production is projected to be up 120 million bushels (+7%) and sorghum up 75 million bushels (+24%) compared to 2023.

The decline in planted acres was a major headline in media and market reports following the release of the Prospective Plantings report. The final production impact of that number is far from settled. 

Table 1. Acreage (millions) and yield (bushels/acre) for U.S. wheat and sorghum, 2014-2023

	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
WHEAT
Prospective Plantings	55.8	55.4	49.6	46.1	47.3	45.8	44.7	46.4	47.4	49.9
Final Acreage	56.8	55.0	50.1	46.0	47.8	45.5	44.5	46.7	45.8	49.6
Difference	1.0	(0.4)	0.5	(0.1)	0.5	(0.3)	(0.3)	0.3	(1.6)	(0.3)
Harvested	46.4	47.3	43.9	37.5	39.6	37.4	36.8	37.1	35.5	37.3
Percent Harvested	82%	86%	88%	82%	83%	82%	83%	79%	78%	75%
Average Yield	43.7	43.6	52.7	46.3	47.6	51.7	49.7	44.3	46.5	48.6
SORGHUM
Prospective Plantings	6.7	7.9	7.2	5.8	5.9	5.1	5.8	6.9	6.2	6.0
Final Acreage	7.1	8.5	6.7	5.6	5.7	5.3	5.9	7.3	6.3	7.2
Difference	0.4	0.6	(0.5)	(0.2)	(0.2)	0.2	0.1	0.4	0.1	1.2
Harvested	6.4	7.9	6.2	5.0	5.1	4.7	5.1	6.5	4.6	6.1
Percent Harvested	90%	93%	93%	89%	89%	89%	86%	89%	73%	85%
Average Yield	67.6	76.0	77.9	72.1	72.1	73.0	73.2	69.0	41.1	52.0

Table 2. U.S. wheat and sorghum production (millions of bushels) in 2023 and a projection for 2024

	Wheat				Sorghum
	2023	2024PP	Change		2023	2024PP	Change
Planted	49.6	47.5	(2.1)		7.2	6.4	(0.8)
Harvested	37.3	39.0	1.7		6.1	5.6	(0.5)
Percent Harvested	75%	82%	7%		85%	88%	3%
Yield	48.6	49.6	1.0		52.0	69.8	17.8
Production	1,812	1,932	120		318	393	75

Figure 1. El Nino winters since 2000

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Resources

NOAA, Climate Prediction Center, ENSO: Recent Evolution, Current Status, and Predictions, April 15, 2024

USDA, NASS Office of the Chief Economist, WASDE April 2024

USDA, NASS, Prospective Plantings, March 28, 2024

USDA, NASS, Quickstats, April 17, 2024

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Recent reports from USDA provide insight into the supply prospects for the 2024 winter wheat crop. The Winter Wheat and Canola Seedings publication on January 12, 2024, showed U.S. farmers planted 34.425 million acres of winter wheat for 2024, down about 6 percent from the 36.699 million planted for 2023. This is still the second-highest winter wheat seedings number in the last eight years. Texas planted 5.9 million acres compared to 6.4 million last year; Oklahoma planted 4.3 million compared to 4.6 million. Kansas, the top winter wheat producing state in the nation, planted 7.5 million acres for 2024, down from 8.1 million last year. 

Winter wheat crop condition ratings are well above last year, raising prospects for better winter wheat yields and a better harvested-to-planted ratio in 2024 compared to 2023.  The last USDA report available for the U.S. and specific states was November 26. Kansas updated its wheat crop condition ratings on December 31. The USDA has since suspended weekly crop condition rating reports until the first of April.

Over the last three years, the average harvested-to-planted percentage for winter wheat is about 71 percent.  With a trendline yield of about 51 bushels per acre and 34.425 million planted acres, an early estimate of 2024 winter wheat production is 1.246 billion bushels, around last year’s production and a little lower than the 10-year average production. Winter wheat production in 2023 was 1.248 billion bushels. The 10-year average production level is 1.286 billion bushels. A higher expected yield and harvested-to-plated ratio are expected to compensate for this season’s lower acreage. 

References

USDA, NASS Crop Progress, November 27, 2023 and January 2, 2024

USDA, NASS Quickstats, accessed January 17, 2024.

USDA, NASS Small Grains Summary, September 30, 2023

USDA, NASS Winter Wheat and Canola Seedings, January 12, 2024

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Welch, J. Mark. “2024 Winter Wheat Production Prospects.” Southern Ag Today 4(4.1). January 22, 2024. Permalink