Questions Abound for 2022 Crop Acres
Q: Has there been a time when the acreage mix for the next crop year has been so hotly debated during the current harvest? What is your take on 2022 acres, and how should farmers manage price risk for the 2022 crops this winter?
Tommy Grisafi, ag risk management adviser, Advance Trading
Typically corn and soybeans are the story at harvest, and corn, soybeans and wheat are the crop mix. As we move into 2022, we are at record levels for crops, and some are not tradable at the Board of Trade (canola, flax, durum, cotton, edible beans and Minneapolis wheat to name a few).
The story for 2022 will be what fringe states decide to plant. A dramatic crop switch is possible with states such as North Dakota having many crop options.
It’s not a matter of the price of inputs, but the availability of them. Certain crops are more dependent on fertilizer, and farmers are playing the fertilizer lotto. Some have a winning ticket with prepaid or purchased fertilizer. Others are dependent on outside forces, gambling that fertilizer will be down in the spring. Will the supply chain be able to meet farmers’ needs? Some of these factors are in Mother Nature’s hands, and we all know she is large and in charge.
This winter, I suggest farmers bridge the gap. From December to February, prior to crop insurance price establishment for the 2022 crop, there is risk of loss in cash and futures market prices. If you are afraid to forward sell before crop insurance prices are set or before the crop is planted, we suggest you be forward protected. This will allow you to stay flexible.
Jarod Creed, owner, JC Marketing Services
The 2022 U.S. and worldwide acreage mix is being affected by more variables than normal. Those factors include high grain prices aided by money flow in an inflation-driven world, fertilizer shortages, droves of investment into renewable energy and monster corn ethanol and soybean crush margins.
For 2022, we know hard red winter wheat has already chipped away at the 180-million-acre pie corn and soybeans would typically claim. Other small grains are also enticing a move away from corn and soybeans. The slight but meaningful moves away from corn and soybeans is the starting point, and then normal crop rotation and margin outlook will dictate the rest.
The margin outlook on the table for farmers, even with higher input costs, calls for aggressive but flexible behavior. Available supply of fertilizer and chemicals can certainly derail plans set now.
We do research to know our costs and measure margin opportunities on insurance guaranteed bushels versus an APH yield versus top-end yield. The results have led us to aggressively set floors for 2022 on what is probably more bushels than normal at this time of year. Be aggressive but flexible.
