A lot of challenges are making it difficult to predict what farmers are going to plant in the spring. Higher input costs and the availability of those inputs have thrown many plans into question. Joe Vaclavik is the found and president of Standard Grain. He says the acreage battle has been underway since last year.
“I think that dating back to a fall of last year, the trade was very aware of the fertilizer situation and the fact that fertilizer prices were rising drastically, and that it might have an impact on the acreage mix. So, for a moment in time, we saw the ratios and new-crop pricing favor corn, like the market was trying to buy corn acreage back because it felt like it was losing acres because of the fertilizer situation, right? The fact of the matter, right now, is that nobody has a clue what the crop rotation’s gonna look like.”
He says acreage estimates are coming in all over the board. “There are well-respected analysts out there. I think the University of Illinois had an estimate of 96 million corn acres, which would be an increase of like two-and-a-half million versus last year. And then I think Farm Futures had a customer survey where they had a number just above 90 million, and the difference between 90 million and 96 million, when it comes to price implications, balance sheets, fundamentals, is phenomenal. They’re two totally different markets, two totally different worlds, so nobody has a clue what the acreage numbers are gonna be.”
Predicting the outcome of the acreage battle in a typical year is a difficult thing. He says 2022 is taking that difficulty to a whole new level. “In any given year, trying to predict or estimate what the acreage is going to be is a near-impossible task. Some people might get the numbers right ahead of the reports once in a while, but nobody’s consistent with it. There’s always a curveball, and this year I think there’s going to be more curveballs than normal.”
The questions aren’t limited to just corn and soybeans either. “Not only just corn and soybean acres, but you’ve got a bunch of other crops that make money: spring wheat makes money, oats make money, small grains make money. And the other piece of the puzzle is that the acreage pie, in general, principle crop acreage has trended lower for years, for the last seven or eight years. There are so many wildcards here, it’s such an unknown, and I think it’s a supportive factor for the market, the fact that we just don’t know.”
He says the interesting part of the discussion is that most farmers typically don’t want to change their year-to-year crop rotations.
“I know people who have their needs covered, and they feel good about the situation. Most farmers don’t want to change rotation. That’s what I’ve realized over the years. I surveyed all my customers a while back, and everyone told me that they’re not interested in switching rotation and if they can stick the rotation, I think that’s what they’re going to do. But the fertilizer situation could be tricky. You may have a farmer who they locked up fertilizer needs on paper for a given price, but actually getting physical delivery of that product might be a different story.”