Market News & Headlines >> Corn acreage headed higher?
Although the 2023 corn planting season is still months away for most of the nation, the corn market is starting to turn its attention toward crop prospects, so we want to take an early look at prospects for corn acreage and yields. To understand this year’s acreage prospects, we must first understand what happened to acreage in 2022.
To start with, 2022 corn plantings were limited by wet spring weather, which resulted in higher-than-average preventing planting claims. U.S. producers claimed prevented planting on 3.154 million acres in 2022. In Farm Service Administration data going back to 1996, annual prevented corn plantings have averaged only 1.84 million acres and that average is skewed high by big 2019 and 2020 totals that were far above any other years. Median prevent plant acres for corn are at only 950,000. So, we could add significant corn acres in 2023 simply through a return to more normal planting conditions.
Next, taking a look at harvested acreage, USDA slashed that total by 1.64 million acres in its Annual Crop Summary report earlier this month, cutting acres sharply in drought-stricken western growing states. As a result, the percentage of U.S. corn planted acres that were actually harvested for grain last year fell to just 89.4%, the lowest since 2006 — 1.5 percentage points below the long-term average since 1990 and 2 full points below the 10-year average. The bottom line is that even if corn plantings don’t rise, harvested acreage may, and if planted acres do increase as most expect, the increase in harvested acreage should be even larger.
Finally, we come to yield prospects. Right now, all we can do is point to probabilities for yield based on weather patterns and historical trends. Current conditions do not look favorable for yield prospects. Some 45% of U.S. corn area was under drought as of Tuesday, according to USDA, up from just 19% a year earlier. But a shifting weather pattern may favor better yields. The La Nina weather phenomenon, which tends to have a negative impact on U.S. corn yields, is fading away. The National Oceanic and Atmospheric Administration now forecasts an 82% chance of La Nina/El Nino neutral conditions by the March/April/May period and there are some indications an El Nino event could evolve by mid-summer, which would look favorable for yield prospects.
In 12 years, going all the way back to 1960 when El Nino conditions were in place by the July/August/September period, the U.S. corn yield exceeded the 20-year trendline level 10 times by anywhere from 1.5% to 14.8%. The correlation broke down a bit in the 1990s and early 2000’s, but the last three El Nino years have all featured above-trend yields. Even a gain of 1.5% over trend this year would be enough to push the U.S. corn yield above 180 bushels for the first time.