USDA Chief Economist Gets Candid About Continuing Crisis in Ukraine
Seth Meyer Ag Outlook Forum
USDA released an initial look at 2022 planted acreage this week. Ahead of the March grower survey, USDA forecasts both soybean and wheat acres to increase, but corn acres to fall from 2021.
During the Ag Outlook Forum, USDA Chief Economist Seth Meyer’s official estimates point to 92 million acres of corn and 88 million acres of soybeans. If realized, the agency’s initial projections means U.S. farmers will plant 0.8 million more acres of soybeans this year and 1.4 million fewer acres of corn. And as volatile prices continued to stronghold the markets to close out February, farmers are busy finalizing planting plans this year.
No Records for 2022
And when you combine corn and soybean acres, Meyer's USDA forecasts the total combined acres will reach 180 million acres, which is below the high of 180.6 million that U.S. farmers planted last year.
“Folks need to remember we have a couple of things constraining even more area, which is all of the remaining crops outside of those prices are pretty good,” says Meyer. “Look at where cotton prices are and things like that. And on top of that, we always start with an assumption of normal prevent plant as well, too, which last year was a little bit less than normal prevent plant, and we had some pretty big prevent-plant numbers the year before. So we are factoring in normal prevent plant and pretty good crop prices all around.”
Meyer says USDA will continue to watch the corn-to-soybean price ratio, which will also play into the final acreage estimate.
“The bean-to-corn price ratio, you've seen it strengthen a little bit more recently, and it can be more favorable for beans, but it's still relatively strong for corn,” says Meyer. “When China's in our market, it’s actually a pretty strong corn position to where we've been. So we are currently thinking corn will hold some of those acres.”
Ongoing Crisis in Ukraine
Meyer’s 2022 supply and demand forecast came out just hours after Russia declared war on Ukraine. And as the crisis continues, Meyer acknowledges that the situation is impacting world trade, as well as U.S. commodity prices.
“We do have some concerns with input prices,” says Meyer. “I think that today's [Thursday's] information heightens that concern. Prices are good for producers; we're going through a period now of price discovery for revenue assurance for folks. Crop insurance is at levels not seen in a decade. So, you're tempering some of those input prices with higher output prices as well, too. But this news is not yet digestible. I just don't have a way to determine what's going on.”
So, are USDA’s most recent projections now void due to the crisis in Ukraine? With commodity prices seeing extreme price moves both Thursday and Friday, Meyer says there’s just too many unknowns.
“Does it certainly make it a lot broader potential set of outcomes? Yes. But I think we're really going to have to watch how this unfolds, because there’s direct effect on grains, there's the secondary effect on energy. There's the third-level effect on sanctions. And I don't think we know enough to know how this is going to play out and how it goes. So, we're going to continue to watch it. I think it just throws the door wider open into where we could end up.”
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