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Farm Futures magazine reports:

To view the complete report, click here.

New producer data from a nationwide March 2021 Farm Futures survey forecasts corn acres to rise 3.1% from a year ago to 93.6 million acres. While it would be the largest acreage since 2016 (94.0 million acres), it would only be the fourth largest corn acreage the U.S. has seen since 1945.

Factoring in a trendline yield of 179.5 bushels per acre with no adverse weather events, Farm Futures estimates the 2021 U.S. corn crop could total 15.413 billion bushels, which would best 2016's record haul of 15.15 billion bushels as the largest in history.

Would that production be large enough to ease tightening supplies? Factoring in current 2020/21 ending stock projections, as well as USDA's preliminary 2021/22 demand forecasts from the February 2021 Outlook, Farm Futures estimates place 2021/22 ending stocks at 1.815 billion bushels. The resulting stocks-to-use ratio of 12.0% would be an increase from this year's 10.3% and would likely be the liquidity boost the corn market needs to maintain adequate supplies.

But these estimates assume rather conservative export figures for both the 2020/21 and 2021/22 marketing years. USDA has reported multiple weeks of record-breaking corn export volumes over the past month, with another strong week of loading paces expected tomorrow.

And China's 152.6 million bushels worth of new 2020/21 sales last week, not to mention 2020/21 marketing year to date shipping paces that are already nearly 3.7 times higher than last year's cumulative shipments, suggest that USDA is likely to raise corn export targets in the coming months. The likelihood of an increase rises if Brazil's safrinha corn crop falls short of market expectations.

The corn acreage expansion could weigh on prices in the short run, but there isn't a lot of room for error this year. Drought is already prominent in the Dakotas where corn acreage is expected to increase this year.

Soybean supply to remain tight
The March 2021 Farm Futures survey estimates 2021 U.S. soybean acreage at 88.5 million acres, up 6.5% or 5.4 million acres from 2020. Using USDA's trendline yield of 50.8 bushels per acre, 2021 U.S. soybean production would top 4.451 billion bushels.

But coming off a tight 2020/21 marketing year, 88.5 million acres may not solve soybean shortage problems currently looming over markets. Given current USDA supply estimates and new crop demand projections, the 2021/22 soybean stockpile will likely only leave 71.9 million bushels available for use at the end of the 2021/22 marketing year.

That translates to 6 days of carryout and a new record tight stocks-to-use ratio of 1.6%. USDA projected 90 million acres of soybeans to be planted this spring at the February 2021 Outlook. That extra 75 million bushels definitely provides more cushion to the soybean market than the Farm Futures estimate.

An uptick in winter wheat acreage does increase the prospects of double-cropped soybeans to be planted later this spring, but it will struggle to keep up with corn acreage. Plus, an increase in farmer fertilizer and chemical purchases that pushed fertilizer prices higher since last fall suggest farmers planned to plant corn over soybeans.

The new crop soybean-corn price ratio has held steady over the 2.5 mark, favoring increased soybean acres over corn in 2021. But rapid corn usage rates, largely due to export demand, shifted some soybean acres back to corn after the December 1, 2020 quarterly grain stocks report was released in early January 2021.

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