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Grain Prices Take Huge Bite Out Of Sorghum, Wheat Acreage In 2017, Corn Fares Well
Clean Wheat Field at Desha County Arkansas
Photo courtesy Kevin Quinn, Extension Video Specialist
LITTLE ROCK, ARK.
Arkansas grain producers found themselves dealing with fickle market forces in 2017, as grain sorghum and wheat acreage dropped sharply in the state, chiefly due to low commodity prices, while corn acreage and yields hit their fourth-highest totals.
Corn hits 4th highest yield, acreage
Jason Kelly, extension wheat and feed grains agronomist for the University of Arkansas System Division of Agriculture, said warm, dry weather early in the year helped growers get off to a “great start compared to the last few years. We were able to get planted early and had good stands, both are important to achieve high corn yields.
“The flooding in late April and early May did cause substantial damage and many acres of corn were lost, which were ultimately planted to soybeans,” he said.
Arkansas growers planted 620,000 acres of corn and the state average yield was expected to be 179 bushels per acre. Only 2014, at 187 bushels per acre, 2013 at 186 bushels per acre and 2015 at 181 bushels per acre were higher.
“The growing season in May-July was cool, with ample rainfall fell for most growers and was conducive for high yield potential,” Kelley said. “Yields were excellent in many areas but varied in others, most likely due to too much rainfall.
“Late season tropical storms caused some lodging on later harvested corn that likely reduced the overall state average to some degree,” he said.
However, the positive news in the yield department belies a struggling corn market.
“The last five years have produced the five largest U.S. corn crops on record and production has outpaced demand,” said Scott Stiles, extension economist for the Division of Agriculture. “The U.S. corn market is now buried, you might say, under the largest ending stocks we've seen since the mid-1980s.”
For 2017, the U.S. Department of Agriculture expects corn ending stocks to increase modestly to 2.437 billion bushels; up 142 million from last year's 2.295 billion.
Stiles said that in the December supply/demand report, USDA pegged average producer prices to be slightly less for the 2017 crop at $3.20 per bushel and fall within a range of $2.85 to $3.55.
“In Arkansas, we're likely in the upper end of that price range for the portion of the 2017 crop that's already been marketed,” he said.
A significant portion of the state’s corn production can be stored on-farm now and marketed over wide window of time.
“This allows our growers to accommodate the year-round needs of say our poultry industry. Being able to market corn to the state's livestock sector has generally provided our growers with corn prices above the U.S. average price,” Stiles said. “For the 2016 crop, Arkansas' average price received for corn was $3.69 while the U.S. average was $3.36 per bushel. This year's state average price won't be considerably different.”
Sorghum acres plummet
Grain sorghum acres continued a significant downturn that began in 2016.
“It is estimated that only 9,000 acres of grain sorghum were planted compared to 47,000 in 2016 and 450,000 acres in 2015,” Kelley said. “This would represent the lowest recorded acreage for Arkansas since 1929 – when recordkeeping began.”
There are several reasons why acreage dropped so low in 2017, “but low grain prices, the threat of sugarcane aphids, and the experiences with pre-harvest sprouting that led to unmarketable grain in 2016 all took a toll on acreage,” he said.
There is a silver lining though, Stiles said.
“With acreage and production dropping off this year, sorghum ending stocks are tightening,” he said “In response, 2017 producer prices will be a little better. The USDA is currently projecting an average producer price of $3.10 per bushel compared $2.79 last year.
“During our peak harvest month, Mississippi River bids averaged $3.34 per bushel,” Stiles said. “Given that, we might top the U.S. average.”
Wheat decline part of national trend
“Wheat acres were also down, a function of low grain prices in comparison to other crops that could be planted,” Kelley said.
Arkansas growers harvested 125,000 acres of wheat in 2017, which is a recent history low.
“Nationally winter wheat acreage declined more than 3 million acres in 2017 compared to the previous years as other crops, particularly corn and soybean had a greater profit potential,” he said.
Stiles said wheat pricing may see an uptick.
“The majority of our wheat tends to be marketed at harvest,” he said. “Fortunately, we saw wheat prices move sharply higher during the month of June this year, and in fact, July ‘17 futures rallied about $1.50 in its final month before expiration.”
Stiles said there were opportunities to price wheat at or above $5 per bushel during harvest. However, “I don't think we'll average $5 for the 2017 crop, but we could top last year's state average price of $4.66,” he said, “but it’s too early to say." ∆
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