FOCUS ON AG

Written by Kent Thiesse

Farm Management Analyst and Vice President, MinnStar Bank
July 9, 2018

2018 SOYBEAN ACREAGE SURPASSES CORN IN USDA REPORT

The late June USDA Acreage Report is always highly anticipated, because it becomes the first “hard
data” after the March USDA Plantings Intentions Report to give an indication of crop production levels
for a given growing season. Many times, the June USDA Report can have a big impact on grain market
trends, either upwards or downwards; however, the 2018 Report did not seem to have much effect on
either the corn and soybean market. Based on the June 29 th USDA Report, producers planted more
acres to both corn and soybeans, compared to the March Planting Intentions Report.

The biggest news in the June 29th USDA Report was that the number of soybean acres planted in the
U.S. in 2018 will surpass total U.S. corn acreage for the first time since 1983. It should be noted that
1983 was the year that USDA implemented the Payment-in-Kind (PIK) program that paid farmers not
to plant millions of corn and wheat acres, in order to reduce large U.S. grain surpluses. Soybeans were
not part of the 1983 PIK program, so soybean acreage was not impacted.

USDA is currently estimating 2018 planted soybean acres at nearly 89.6 million acres, which compares
to just under 89 million planted acres projected on March 1. The 2018 soybean acreage still trails the
record U.S. soybean acreage of over 90.1 million acres in 2017. The USDA soybean acreage projection
came in very near grain trade estimates, resulting in very little immediate impact on Chicago Board of
Trade (CBOT) soybean prices immediately after the USDA Report was released.

Minnesota soybean acreage for 2018 is estimated at 7.8 million acres, which is a decline of 100,000
acres from the March 1st acreage projection, and compares to 8.15 million acres of soybeans planted in
2017. Iowa is projected to plant 9.9 million acres of soybeans this year, representing an increase of
100,000 acres from the March estimate, and compares to 10 million acres in 2017. Illinois showed an
increase of 300,000 soybean acres, compared to March 1 st estimates, while Indiana, South Dakota, and
Wisconsin also showed increases of 100,000 in soybean acreage in the June 29 th Report. North Dakota
had the biggest reduction in soybean acreage from the March planting estimates at 500,000 acres,
while Nebraska also indicated a reduction of 100,000 planted soybean acres from the earlier estimate.

Even though 2018 planted corn acres in the U.S. are expected to trail total U.S. soybean acreage, the
corn acreage estimate in the June 29 th USDA Report came in about 1.1 million acres above the
projected U.S. corn acreage on March 1. The latest report listed U.S. planted corn acres in 2018 at just
over 89.1 million acres, which is a decrease of over 1 million acres from the 2017 planted corn acres.
The 2018 U.S. estimated corn acreage compares to just under 90.2 million acres in 2017, 94 million
acres in 2016, 88 million acres in 2015, 90.6 million acres in 2014, and 95.4 million acres in 2013.

Based on the June 29th USDA Report, Minnesota planted an estimated 7.8 million acres of corn in
2018, which is a decline of 3 percent from just over 8 million acres of corn planted in 2017.
Minnesota’s projected corn acreage increased by 300,000 acres from the March 1 planting intentions.
Other States that showed major increases in planted corn acres , compared to March 1 st estimates, were
Nebraska with an increase of 400,000 acres and North Dakota with an increase of 300,000 acres. Iowa
is projected to plant 13.3 million acres of corn in 2018, which is the same as the 2017 corn acreage,
and is the same as the March estimate. Other States that were unchanged from the March 1 st corn
acreage projection were Illinois and Indiana. South Dakota was the only State to show a major decline
in corn acreage, compared to March 1st estimates, with a drop of 500,000 planted acres.
The June 29th USDA Report pegged total 2017 U.S. wheat acreage at 47.8 million acres, which would
be an increase of 1.8 million acres, compared to 2017 wheat acres. The 2018 total U.S. wheat acreage
would still be the second lowest since 1919, trailing on the 2017 U.S. wheat acreage. The projected
2018 wheat acreage compares to 46 million acres in 2017, 50 million acres in 2016, and 54.6 million
acres in 2015. The estimated spring wheat acreage in the latest report was an increase of 482,000 acres
from the March 1st projections. 2018 spring wheat acreage in North Dakota is estimated at 7.7 million
acres, which is an increase of 1 million acres from the 2017 wheat acres. Minnesota spring wheat
acreage for 2018 is estimated at 1.61 million acres, which represents an increase of 38 percent from
1.17 million wheat acres in 2017.

Some areas of the Western Corn Belt struggled with delayed planting this Spring, and portions of the
same region have been impacted by excessive rainfall during June and early July. Thus far, no major
drought areas have developed in the primary corn and soybean producing areas of the Midwest, as we
head into the critical tasseling and pollination period for corn. Many States have had very strong
“good-to-excellent” crop ratings in the recent weekly USDA crop progress reports.

As of early June, USDA is projecting 2018 national average yields at 174 bushels per acre for corn and
48.5 bushels per acre for soybeans, which compares to the final U.S. average yields in 2017 of 176.6
bushels per acre for corn and 49.1 bushels per acre for soybeans. Some grain marketing analysts are
wondering if the recent weather-related crop production issues in Southern Minnesota, Northern Iowa,
and Eastern South Dakota will be enough to affect total U.S. corn and soybean production, and thus
cause some strength in the grain markets by Fall. However, any enhancements in final U.S. corn and
soybean yield estimates in the coming months could put pressure on grain prices as we head into
harvest season.

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Note --- For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960);
E-mail --- kent.thiesse@minnstarbank.com) Web Site --- http://www.minnstarbank.com/