Today, we got the USDA’s announcement of what 2018/19 corn acres are going to be in America. Here’s our breakdown of the numbers.
The USDA’s Prospective Plantings report showed the market that American farmers will plant 88.03 million acres of corn in 2018. This is 2% lower what than last year’s 90.17 million acres of corn.
Compared to the five-year average of 91.63 million acres, 2018/19 corn acres are 3.9% lower.
Going into the report, the average guesstimate for corn was 88.4 million acres. The USDA had projected 90.0 million acres last month. Thus, the market reacted strongly to the report. The May 2018 corn contract in Chicago added 11.5 cents to hit $4.84 by 12:30 p.m. EST. The July contract added 11.25 cents and was just shy of $3.94.
In breaking the acreage down state by state, here’s what’s notable. In brackets, the first number is the change year-over-year, while the second number is the change compared to the five-year average.
• Illinois: 11 million acres (-2% YoY; -5.6% from 5-year average);
• Minnesota: 7.5 million acres (-7% decline YoY; -9.4% from 5-year average;
• Iowa: 13.3 million acres (Unchanged YoY; -2.2% from 5-year average);
• North Dakota: 3.05 million acres (-11% YoY; -4.5% from 5-year average); and
• Indiana: 5.1 million acres (-5% YoY), -10.5% from the 5-year average)
Overall, this is the first pass at acres. If you look at the chart below, we can tell that the USDA’s final number for corn is usually revised lower in the past 5 years.
This was the first time since 1983 that corn acreage in the United States fell below acreage of the soybean crop. (At least, what is estimated).
Thirty-five years ago, farmers were encouraged to plant fewer acres during a major farming crisis.
Today, it’s a matter of profitability at a time that South American crops are far more competitive against U.S. agricultural commodities.