Total Acreage Planted Will Be Dictated By Weather And Changes In Prices

DR. AARON SMITH

KNOXVILLE, TENNESSEE

On Thursday March 28, 2024, the USDA released its annual Prospective Plantings Report. The report contains farmer-based survey estimates for plantings of principal row crops in the United States. The report builds a
base line for acreage projections for the 2024 crop year. Planted acreage estimates will be modified throughout the planting window, primarily due to weather or market conditions. 

Overall, the Report estimated 313.3 million acres would be planted to principal crops (19 crops total), down 6.3 million acres compared to 2023. Many states had reductions in projected planted acres the five largest year-over-year reductions were Kansas, Texas, Missouri, Oklahoma, and North Dakota with decreases of 1.3 million acres, 1.2 million acres, 0.7 million acres, 0.6 million acres, and 0.5 million acres compared to 2023. 

U.S. corn acreage was projected at 90 million acres, down 4.6 million acres compared to last year and 1 million acres lower than the USDA’s February Outlook estimate. In Tennessee, corn planted acreage was estimated at 930,000 acres, down 10,000 compared to 2023. 

U.S. soybean acreage was projected at 86.5 million acres, up 2.91 million acres compared to last year and 1 million acres lower than the USDA’s February Outlook estimate. In Tennessee, soybean planted acreage was estimated at 1.65 million acres, up 50,000 compared to 2023. 

U.S. cotton acreage was projected at 10.7 million acres, up 0.443 million acres compared to last year and 1 million acres lower than the USDA’s February Outlook estimate. In Tennessee, cotton planted acreage was estimated at 300,000 acres, up 35,000 compared to 2023. 

U.S. all wheat acreage was projected at 47.5 million acres, down 2.1 million acres compared to last year and 0.5 million acres lower than the USDA’s February Outlook estimate. In Tennessee, wheat planted acreage was estimated at 380,000 acres, down 90,000 compared to 2023. 

Overall, the Report was slightly bullish for corn, cotton, and wheat and neutral for soybean prices. Futures markets reacted accordingly, with December corn up 15 1⁄2 cents, December cotton up 0.65 cents, July wheat up 13 cents, and November soybeans up 2 3⁄4 cents for the day. Moving forward the total acreage planted will be dictated by weather and changes in prices. It is unlikely that the Prospective Plantings Report will dramatically alter 2024 price ranges for any of the four commodities. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 60 under to 8 over, with an average of 16 under the May futures at elevators and barge points. Ethanol production for the week ending March 22 was 1.054 million barrels per day, up 8,000 from the previous week. Ethanol stocks were 26.092 million barrels, up 0.083 million barrels compared to last week. Corn net sales reported by exporters for March 15-21 were net sales of 47.5 million bushels for the 2023/24 marketing year and 5.0 million bushels for the 2024/24 marketing year. Exports for the same period were down 19% compared to last week at 48.6 million bushels. Corn export sales and commitments were 80% of the USDA estimated total annual exports for the 2023/24 marketing year (September 1 to August 31) compared to the previous 5-year average of 88%. May 2024 corn futures closed at $4.42, up 3 cents since last Friday. For the week May 2024 corn futures traded between $4.26 and $4.48. May/Jul and May/Dec future spreads were 12 and 35 cents. July 2024 corn futures closed at $4.54, up 2 cents since last Friday. 

New crop cash prices ranged from $3.82 to $4.56 at elevators and barge points. December 2024 corn futures closed at $4.77, up 2 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 December 2024 Put Option costing 35 cents establishing a $4.45 futures floor. 

Soybeans

Across Tennessee the average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 33 under to 12 over the May futures contract, with an average basis at the end of the week of 6 under. Soybean net weekly sales reported by exporters were net sales of 9.7 million bushels for the 2023/24 marketing year and 4.4 million bushels for the 2024/25 marketing year. Exports for the same period were up 2% compared to last week at 28.9 million bushels. Soybean export sales and commitments were 86% of the USDA estimated total annual exports for the 2023/24 marketing year (September 1 to August 31), compared to the previous 5-year average of 93%. May 2024 soybean futures closed at $11.91, down 1 cent since last Friday. For the week May 2024 soybean futures traded between $11.77 and $12.10. May 2024 soybean-to-corn price ratio was 2.69 at the end of the week. May/Jul and May/Nov future spreads were 14 and -5 cents. July 2024 soybean futures closed at $12.05, unchanged since last Friday.

New crop cash soybean prices at elevators and barge points ranged from $11.51 to $11.79. November 2024 soybean futures closed at $11.86, down 1 cent since last Friday. Downside price protection could be achieved by purchasing a $12.00 November 2024 Put Option which would cost 68 cents and set a $11.32 futures floor. Nov/Dec soybean-to-corn price ratio was 2.49 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for March 27 were 87.77 cents/lb (41-4-34) and 89.77 cents/lb (31-3-35). Cotton net weekly sales reported by exporters were 98,200 bales for the 2023/24 marketing year and 72,200 bales for the 2024/25 marketing year. Exports for the same period were down 9% compared to last week at 360,700 bales. Upland cotton export sales were 93% of the USDA estimated total annual exports for the 2023/24 marketing year (August 1 to July 31), compared to the previous 5-year average of 101%. May 2024 cotton futures closed at 91.38 cents, down 0.15 cents since last Friday. For the week, May 2024 cotton futures traded between 90.52 and 92.31 cents. May/Jul and May/Dec cotton futures spreads were 0.59 cents and -7.39 cents. July 2024 cotton futures closed at 91.97 cents, up 0.12 cents since last Friday. 

December 2024 cotton futures closed at 83.99 cents, up 0.04 cents since last Friday. Downside price protection could be obtained by purchasing an 84 cent December 2024 Put Option costing 5.06 cents establishing a 7.94 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 12.5 million bushels for the 2023/24 marketing year and net sales of 7.8 million bushels for the 2024/25 marketing year. Exports for the same period were up 3% compared to last week at 15.0 million bushels. Wheat export sales were 97% of the USDA estimated total annual exports for the 2023/24 marketing year (June 1 to May 31), compared to the previous 5-year average of 100%. Wheat cash prices at elevators and barge points ranged from $5.13 to $5.25. May 2024 wheat futures closed at $5.60, up 6 cents since last Friday. May 2024 wheat futures traded between $5.38 and $5.68 this week. May wheat-to-corn price ratio was 1.27. May/Jul and May/Sep future spreads were 15 and 31 cents. 

July 2024 wheat futures closed at $5.75, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $5.80 July 2024 Put Option costing 36 cents establishing a $5.44 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.27 to $5.50. September 2024 wheat futures closed at $5.91, up 6 cents since last Friday.  ∆

DR. AARON SMITH: University of Tennessee