Morning Highlights
Morning Highlights

USDA reports underscore marketing plan importance

John Ondrey

Apr 12, 2022

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Listen to the full audio interview with Kent Beadle.

The recently released USDA Prospective Plantings report revealed some surprising findings about the number of soybean acres that could be added in 2022 and the number of corn acres that could disappear.

“The USDA survey surprised the trade with a number of additional soybean acres — about 3 million more soybean acres than the average trade estimate,” says Kent Beadle, director of producer brokerage for CHS Hedging. “Those acres had to come from somewhere, so we had about 2.5 million fewer corn acres. And that has some implications.

“First, it told us that high fertilizer prices led to American farmers wanting to plant more soybeans,” Beadle notes. “Another factor was increased discussions around renewable diesel and the impact that is going to have on soybean prices.”

The report triggered new highs in new corn crop prices and a sizeable correction in soybean prices, Beadle says, as the market tried to account for the additional supply of beans that could become available.


Impact on farmers’ plans

Given the post-report price shifts and timing of the report — just as many U.S. farmers are putting planters into action — it’s possible the price shifts may move some acres from soybeans back into corn, says Beadle.

“We don’t think there’s going to be a large shift — maybe a half-million to a million acres at most — so there will still be more soybean acres and fewer corn acres than we thought, but we could see some shifts because of the price movements we’ve had,” he says.


Quarterly Grain Stocks report findings

While the USDA Grain Stocks report was less surprising than the Prospective Plantings report, it held some interesting information, as well. Corn stocks were slightly lower than average trade estimates, but pretty much as the marketplace had anticipated, says Beadle.

That means, for example, that USDA probably won’t need to do much with feed and residual corn usage on its next supply and demand revision,” Beadle notes. “It’s a little different story for soybeans. The average trade estimate ended up being below what the USDA gave us by about 29 million bushels. There’s an implication that either residual usage might go down a little bit or that eventually the USDA might actually increase the size of last year’s soybean crop, but not to the point where it’s going to have any major implications for price going forward.”


Risk management tips

Beadle offers these tips as you refine cropping plans in today’s volatile markets.

“At this time of year, growers should be taking a look at expenses and break-evens,” he says. “At CHS Hedging and AgSurionSM Risk Consulting, we try to plan for the gross dollars per acre required to make a return on assets and equity. Then we look at prices and determine if we can reach the desired objectives. In the volatile environment that we’re in, with sizeable moves every day, what growers should be doing is talking with their advisors and putting together a marketing plan that allows them to achieve their goals.