The 2023 U.S. Department of Agriculture (USDA) acreage report (USDA) was recently released and included data that surprised market analysts and shifted commodities markets. Joe Lardy, CHS Hedging research analyst, AP, says the biggest shock was lower-than-expected soybean acres.

Decline in soybean acres

Farmers planted 83.5 million soybean acres this season, down 5% from last year, according to the USDA. Lardy says the acreage drop stunned analysts.

“The soybean acreage number is far out of range from what everyone expected. We need to analyze the factors that led to that decline and manage the impacts that smaller acreage number will have for marketing this year and next,” he says.

Several factors favored more corn acres this season. In most areas, weather was favorable for early fieldwork and planting, which contributed to more corn being planted.

“Many factors favored more corn acres this season. Some of our modeling that analyzes agronomics and economics supported more corn acres in 2023. As cotton prices declined, that led to additional corn acres in the South.”

Effect of renewable fuel production

As more soybean crushing facilities become operational in the coming years to supply soybean oil for the growing renewable diesel industry, Lardy says maintaining planted soybean acres will be critical.

“In the short term, the [2023] soybean acreage decline is not a catastrophe for renewable fuel production. It certainly is concerning, but the industry is just starting to bring crushing facilities online,” he says. “In 2024 and beyond, the soybean market must price itself into a place where it’s attractive to plant additional acres to support renewable fuel production. It will be interesting to see if we decide to sacrifice a bit of our export program to move some of those beans domestically for crushing.”

Adjusting marketing plans

Lardy says the recent acreage report should prompt farmers to reexamine their marketing strategies. “The USDA has a solid history of not only being on the high or low end of expected acreage, yield and stock estimates, but in some cases being completely outside those ranges. That can give the market a real shock,” Lardy explains. “I encourage farmers to monitor the reports and prepare their marketing plans to capture market upswings. On the flip side, farmers also need to protect themselves from big surprises that might move the market in a negative direction.”