Alan R. May

English

Research Papers in Economics

 
____________ 
Contact the author at alan.may@sdstate.edu or 605-688-4862 
. 
 
            E C O N O M I C S 
   C O M M E N T A T O R 
South Dakota State University      No. 515                         April  5, 2010
 
 2010 Prospective Plantings 
Report Analysis 
 
by 
          Alan R. May 
  Extension Grain Marketing 
Specialist 
 
  
The National Agricultural Statistics Service issued its 
annual Prospective Plantings report on Wednesday, March 
31, 2010. This is the first major production related report 
of the year that provides a picture of what may be possible 
for crop production in the United States this year.  At the 
end of this issue of the Economic Commentator refer to 
Table 1 for the U.S. Planting Intentions and Table 2 for 
South Dakota Planting Intentions. 
 
The planting intentions for 2010 reflected moderate 
changes to planted acres again this year. Corn acres would 
increase 3%, soybean acres would increase by 1% and all 
wheat acres would decline by 9%; all intentions within 
trade expectations. As a result, there were no surprises in 
terms of acres exceeding or not meeting pre-report 
expectations. The corn numbers were viewed as bearish, 
with soybean and wheat numbers being viewed as neutral. 
Compared to 2007 and 2008 when there were very large 
acreage shifts between corn and soybeans, 2010 will likely 
result in a far less dramatic change in planted acres.  
 
There was some concern during the winter months that the 
wet fall of 2009 and the heavy snowpack during the winter 
over much of the corn-belt and plains states might have an 
impact on acres planted to spring wheat and corn. 
However, based on the data contained in this report, it 
appears that farmers took the approach that their planting 
intentions would not be dictated by the weather conditions 
in late February and early March, but rather by 
expectations that planting would not be hindered in the  
 
 
 
spring by lingering snow and excessive moisture. While 
water-logged soils will be a factor for many farmers, the 
rapid snowmelt and low rainfall conditions as of the end 
of March along with hopes for drier forecasts for the 
spring give the majority of farmers a better chance of 
having a more normal planting season than what might 
have been expected just a month ago. The question that 
typically arises once the intentions report is issued is 
whether these acres will hold true by the end of the 
planting season. There is little question that there will be 
changes but the extent of those changes are always hard 
to determine at this point in time. As always, changes in 
the weather and changes in commodity prices could 
easily influence any adjustment in the final acreage 
numbers compared to what farmer said they intended to 
plant.  
 
It is important to note that price discovery for grains and 
oilseeds really begins with the number of acres planted 
to crops raised in the United States and around the 
world. It is the acres planted to corn, soybeans, wheat 
and other crops that provide the foundation for 
expectations of supply against which grain and oilseed 
demand and final carryover supply is then measured. 
This report is important in that it provides the first look 
at what farmers in the United States intend to plant 
giving both producers and buyers of grain an idea of 
potential production for 2010. Planted acreage prospects 
along with on-going estimates for foreign and domestic 
demand will help determine the potential growth or 
decline in carryover supplies and ultimately will 
influence longer term price direction.  
 
CORN  
USDA reports that farmers in the United States intend to 
plant 88.8 million acres of corn (2.3 million more acres 
than a year ago), up nearly 3% from 2009. This would 
be the second largest corn acreage in the last sixty years, 
second only to the 2007 record of 93.7 million acres.  
 
South Dakota farmers reported that they will plant 5.0 
million acres of corn, the same acres planted in 2009.  
 
All the major corn producing states reported relatively 
modest changes in the acres intended for corn. Iowa 
reported 13.5 million acres, down 1% from a year ago. 
Illinois - 12.6 million acres, up 5% from 2009; Nebraska – 
9.2 million acres, up 1% from a year ago; Minnesota – 7.6 
million acres, unchanged from last year; Indiana - 5.7 
million acres, up 2% from a year ago. North Dakota 
farmers intend to plant 2.1 million acres to corn, an 8% 
increase over 2009 but still significantly lower than the 
2.55 million acres planted in 2008. Kansas reported a 
double digit increase in corn acres for 2010; 4.7 million 
acres, up 15% from 2009.  
 
This increase in acres is viewed as bearish if for no other 
reason than this translates into more corn production that 
has to be consumed by steady demand. Carryover supplies 
have increased over the last three years but by small 
increments. Any growth in production that cannot be 
matched by usage would likely mean growth in supplies 
by this time next year.  
 
USDA cited two factors for the increase in corn acres for 
2010. One was the fact that winter wheat acreage was 
significantly reduced in the U.S. this year (which could 
explain the large growth of corn acres in Kansas) and 
expectations of improved net returns. Both factors are 
valid but the expectation of better net returns for corn can 
become a bit more tenuous if there is the chance for high 
yield variability from year to year and if input costs for 
corn are high. One factor supporting USDA’s assertion is 
that corn yields can have higher rates of improvement than 
soybeans under good growing conditions and perhaps 
retain better yields under poorer growing conditions. If 
that were the case, one could argue that if yields are above 
average for corn, returns could be better for corn. 
However, the price relationship between corn and 
soybeans at the current time is such that one could argue 
that there are equal to better chances that soybeans may 
have the better net return. The challenge to this assertion is 
that like the weather, prices can change. As a result, it is 
important to remember that net returns for any crop are 
never realized until expense and gross income are 
established. This simply means that to improve the 
chances of better net return for any crop, one must have a 
solid grasp on cost of production of each crop produced 
and have an effective marketing plan to make sales when 
the market offers a profitable price. While every 
producer’s costs and yields will vary the decision to plant 
more acres of one crop over another is highly influenced 
by expectations of net returns.  
 
SOYBEANS 
USDA’s Prospective Plantings report indicated that U.S. 
farmers intend to plant 78.1 million acres of soybeans, a 
modest increase of 1% compared to a year ago. South 
Dakota producers indicate they will plant 4.4 million 
acres of soybeans, a 4% increase in planted acres 
compared to a year ago.  
 
Soybean growers in practically all the major soybean 
producing states intend to make modest to no changes in 
the acres they intend to plant to soybeans. Iowa will 
likely plant 9.90 million acres, a 3% increase; Illinois 9.5 
million acres, a 1% increase; Minnesota - 7.2 million 
acres, unchanged from last year; Indiana - 5.5 million 
acres, a 1% increase; Missouri - 5.4 million acres, a 1% 
increase; and Nebraska – 4.9 million acres, a 2% 
increase. Kansas farmers intend to plant 4.1 million 
acres, an 11% increase and North Dakota, with 4.0 
million acres, a 3% increase.  
 
The soybean trade tended to view the planting intentions 
for soybeans as neutral. While there was no unexpected 
change in soybean acres, there is an interesting dilemma 
of sorts when it comes to the longer term issue of 
soybean supplies. Domestic supplies of soybeans for the 
2009-10 marketing year were projected at 190 million 
bushels in the March WASDE (World Ag Supply and 
Demand Estimates) report. While this is a larger 
carryover supply than a year ago, these supplies are still 
historically tight if one views them only from a domestic 
standpoint. World supplies are a different story; 
carryover supplies worldwide are estimated at 2.23 
billion bushels, 685 million bushels greater than a year 
ago. With large anticipated production from South 
America this spring, world supplies have grown 
significantly and at some point may cause some pressure 
on domestic prices. The key will be U.S. production this 
year and whether the anticipated growth in soybean 
acres will translate into growing domestic supplies. As 
of late March, however, soybean prices have been 
competitive enough to prevent a loss of acres to corn but 
may have potential for future downside pressure if 
domestic supplies from this year’s crop grow along with 
world supplies.  
 
WHEAT 
All wheat acres planted is expected to total 53.83 million 
acres compared to 59.13 million acres in 2009, a 9% 
decline. Winter wheat acres in the U.S. for 2010 were 
reported in January’s Winter Wheat Planted acres report 
at 37.1 million acres.  However, these acres were 
adjusted to 37.7 million acres in the Prospective Planting 
report.  This reflects a 13% decline in winter wheat acres 
compared to a year ago. Acres expected to be planted to  
 
spring wheat is reported at 13.91 million acres, a 5% 
increase from last year. South Dakota winter wheat 
growers reported planting 1.25 million acres of winter 
wheat, a 16% decline from 2009. Spring wheat acres in 
South Dakota are reported at 1.6 million acres, a 7% 
increase in acres compared to 2009.  
 
Much can be said about all the grain markets and the 
influence of a variety of factors that can impact price. With 
wheat, huge domestic and world supply is the “800 pound 
gorilla in the room” influencing price. In two short years, 
domestic supply has grown from the smallest supply in 
over fifty years to the largest supply in the last twenty 
years. World supply is currently close to matching the 
record supplies of the late 1990s. At the same time, wheat 
growers responded to the market signals by planting less 
wheat in 2009 and again this year as prices have fallen 
consistently from the record levels of late 2007 to mid-
2008. Winter wheat producers planted less winter wheat 
last fall and while much of the decline was likely due to 
price, fewer acres were also the result of weather problems 
that prohibited the planting of some acres. Late this winter, 
it appeared likely that the wet fall of 2009 and the heavy 
snowpack would result in fewer acres of spring wheat this 
year. However, farmers reported they would plant 13.91 
million acres of spring wheat, a 5% increase over a year 
ago. While this is not a large increase, it does indicate 
that farmers were not necessarily planning to write off a 
large number of spring wheat acres simply on the chance 
that there would be a late spring. However, the two 
factors that may still have an impact on spring wheat 
acres actually planted versus what was intended to be 
planted will be price expectations and crop rotation. If 
prices continue to remain weak, one could make the 
assumption that spring wheat acres may decline by the 
time planting season is over. At the same time, wheat fits 
well into crop rotation systems in the northern plains and 
has value for the longer term sustainability of farmers 
overriding the year to year evaluation of which crop 
could provide the best net return.  
 
********************************************************** 
ECONOMICS COMMENTATOR 
******************************************************************************** 
Department of Economics       
South Dakota State University        Phone: 605-688-4141 
Box 504   Scobey Hall              Fax:     605-688-6386 
Brookings, SD 57007-0895            E-Mail:Penny_Stover@ sdstate.edu 
125 copies of this newsletter were produced at a cost of less than $100
 
 
 
 
Table. 1  Planting Intentions: United States.                 
            Average Pre-report 
      2010 Planting    Trade Estimate    2009 Actual final  % Change 
      Intentions (acres)*  of planted acres *  Acreage Planted* 
 
from 2009 
Corn     88.80     88.94     86.48     +3%  
Soybeans    78.10     78.55     77.45     +1%  
All Wheat    53.83    53.33     59.13     -9%  
Winter Wheat   37.70 (37.10) **   ------     43.31     -13%  
Spring Wheat     13.91    13.56     13.27    +5%  
Durum Wheat     2.22     2.47     2.55     -13%  
All Hay     60.46 
1  ------     59.75 
2    +1%  
All Sunflower     2.18   ------     2.03     +7%  
Oil     1.71   ------     1.70     +1%  
Non-oil   467,000 acres   ------   322,000 acres     +41%  
* All acreage values are in millions of acres except for non-oil sunflower.  
Cotton     10.51     10.40   9.15     +15%   
** Winter wheat acres reported in Winter Wheat Seedings report issued by USDA in January 2010  
1 Intended area harvested in 2010 as indicated by reports from farmers  
2 Area harvested in 2009 
Source: USDA – National Agricultural Statistics Service (NASS).  
 
 
 
 
  
 
 
 
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Table 2.  Planting Intentions: South Dakota.                 
 
     2010 Planting    2009 Actual final    % Change 
  Intentions (acres)*    Acreage Planted*    from 2009 
 
Corn    5.00  5.00  0% 
Soybeans    4.40  4.25  +4% 
All Wheat    2.86  3.21  -11% 
   Winter Wheat    1.25 (1.25) **  1.70  -16% 
   Spring Wheat    1.60  1.50  +7% 
   Durum Wheat
***   
All Hay    3.80 
1  3.80 
2  0% 
All Sunflower   605,000 acres    570,000 acres  +6% 
   Oil   510,000 acres    520,000 acres  -2% 
   Non-oil    95,000 acres    50,000 acres  +90%   
*Acreage values are in millions of acres except for all sunflower categories. 
** Winter wheat acres reported in Winter Wheat Seedings report issued by USDA in January 2010. 
*** Durum Wheat planting intentions in SD is estimated at 8,000 acres, down 1,000 acres from last year. 
1 Intended area harvested in 2010 as indicated by reports from farmers. 
2 Area harvested in 2009 
Source: USDA – NASS, South Dakota Agricultural Statistics Service. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2010 Prospective Plantings Report Analysis (South Dakota)

http://repec-sda.sdstate.edu/repec/sda/pdf/Commentator/No515.pdf

2010 Prospective Plantings Report Analysis (South Dakota)

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