USDA reports that spring wheat plantings in 2023 could be the lowest since 1972.
While there were some surprises in the US Department of Agriculture’s March 31 Prospective Plantings report, the weather may end up being the main determining factor for planting this spring.
91,996,000 acres of maize, up 4% from the previous year, 87,505,000 acres of soybeans, up 0.1%, and 49,855,000 acres of all wheat, up 9%, including winter wheat, up 13%, durum wheat, up 9%, and spring wheat other than durum, down 2.4%, are what farmers plan to plant in 2023, according to the USDA. The predicted decrease in cotton planted area from 2022 to 2023 was 18%. Often, cotton can be planted with soybeans instead.
Soybeans and spring wheat other than durum were below average, while the USDA’s estimates for corn, all wheat, winter wheat, and durum were above pre-report trade expectations on average. The overall “feel” of the analyst study was that most predictions for wheat, soybeans, and corn were optimistic.
Owner of Global Risk Management Brian Harris stated, “I wouldn’t say the numbers themselves were a shocker of a report, but most certainly a bullish lean that participants weren’t anticipating.” “People are paying more attention to short-term weather forecasts, and the OPEC production announcement has restored market optimism.”
Over the weekend of April 1-2, the Organization of Petroleum Exporting Countries announced an unexpected reduction in crude oil production. This news drove up the price of crude oil and provided positive support for corn (ethanol) and soybeans (biodiesel).
ADM Investor Services’ vice president of grain research, Steve Freed, saw the USDA data as bullish for soybeans (especially new crop) and corn (especially nearby), pointing out that there are “plenty of nearby beans in Brazil.” He pointed out that the US weather and the net short position in wheat futures held by commodity investors were both supportive of wheat.
As Brazil harvests an anticipated record-large soybean crop, export markets will remain supplied. However, the slight increase in US planted soybean area suggests that supplies will be more limited in the 2023–24 marketing year as the world—primarily China—looks to the US for supplies in between Brazil’s harvests.
President of Trillateral, Inc. Robert Bresnahan described the report as neutral for new-crop winter wheat and bullish for new-crop corn and soybeans, with weather playing a major role in the latter case.
The planted area for spring wheat other than durum, estimated at 10,570,000 acres, was likely the biggest surprise in the study. It was down 265,000 acres, or 2.4%, from 2022 and, if realized, the lowest since 1972. The combined decrease of 270,000 acres in the anticipated planted area in the top three spring wheat states—North Dakota, Montana, and Minnesota—was only somewhat mitigated by an increase of 40,000 acres in Idaho.
Note that the final planted area may vary during the next few weeks. The Prospective Plantings report’s forecasts are derived from probability surveys conducted among around 73,000 farm operators in the initial two weeks of March, before seeds are sown in the majority of the key growing states.
Weather becomes the main factor that can alter the final planted area because fertilizer, crop rotation, and other agronomic considerations, along with price concepts, are essentially decided by the time the surveys are done.
“The weather and whether or not we see some switching from corn to soybeans, a function of this heavy snowpack across a lot of the northern tier — a potential for flooding to wash out earlier corn planting— will be crucial for the markets going forward,” Mr. Harris stated. “The issue with that is that farmers simply adore planting corn, and modern technology allows us to obtain all of that crop quickly, provided the northern tier is not severely affected.”
Given that maize has the longest growth season, weather delays usually have the biggest impact on it. Farmers in the northern Corn Belt and Upper Midwest are coping with frigid temperatures.
The acreage planted to winter wheat was also updated in the report; the initial estimate was made in the USDA’s Winter Wheat and Canola Seedings report on January 12. The USDA said that the expected amount of winter wheat planted for harvest in 2023 was 37,505,000 acres, up 13% from 2022, up 2% from the January estimate, and the largest since 2015. This increase was made “as growers look to capitalize on strong prices.” However, the weather is a factor once more.
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Drought is affecting the core region that grows hard red winter wheat, which includes Kansas, the states bordering it, parts of Nebraska, eastern Colorado, and the panhandles of Oklahoma and Texas. The USDA stated that winter wheat production in drought areas was 100% in Nebraska, 91% in Kansas, 88% in Colorado, and 73% in Texas (Oklahoma is not included in the Drought Monitor). The USDA also stated that 47% of Kansas’ wheat area was classified as exceptional drought, the most severe rating, in its assessment of the US Drought Monitor, which was released on March 28.
Even though more hard red winter wheat has been planted, farmers may “abandon” land and accept insurance benefits owing to poor harvest expectations, which might result in a significant reduction in the area available for harvest.
Mr. Bresnahan stated, “Weather leans bullish for the wheat complex.” The hard red winter wheat belt in the US was the second driest since 1979, while the soft red winter wheat belt was the wettest since 1979. The hard red winter wheat harvest will be in danger if the necessary rain doesn’t fall by the latter half of April.