Technology and Farming Practices Expected to Outpace Lost Acres

What Happened

On Nov. 7, the USDA released tables from the Agricultural Projections report for 2023–2034. The projections, according to the USDA, reflected a composite of model results and judgment-based analysis which were prepared August through October 2024. The figures were interesting, suggesting fewer corn acres with higher yield, and higher soybean acres and yield.

Why This Is Important

The old saying is: “They’re not making any more acres.” The implication — from a production perspective — is that it will take an increase in yield to keep adequate corn supplies available for consumers. The USDA tables indicated planted corn acreage at 94.9 million will eventually decline to 88 million; yield will increase from 173 bushels per acre (bpa) to 199 bpa; production will grow from 15.341 billion bushels to 16.060 billion; ending stocks will hover in the vicinity of 2.2 billion. 

For soybeans, the USDA tables indicated planted acres will gradually grow from 50.6 million to 56.5 million. Yield will increase from 50.6 bpa to 56.5 bpa. Production will rise from 4.162 billion bushels to 5.205 billion. Most new soybean acres will come from corn acres. Soybean ending stocks will remain near 350 million. 

If these projections prove close to accurate, it suggests corn prices could be volatile. Anticipating a higher yield to meet demand while farming fewer acres leaves little room for production error. A disruptive weather event could quickly raise prices. The same may be said for soybeans: Growing demand and the need for more production suggest high price volatility. 

What Can You Do?

Preparation is key. Prices tend to fall quickly after a rally. They do so because great farmers and great technology have pulled crops out of perceived (and real) difficult growing situations in recent years. Set price targets and allow them to execute. Don’t cancel them when market prices get close. Covering sales with call options could be important, especially in a year where prices continue to climb and short supplies become a reality. Consider purchasing puts to establish a price floor. Strong cash sales covered with call options, and unpriced bushels protected by puts will create a balanced marketing approach.

Find What Works for You

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation rather than emotionally charged responses to market moves, which are always dynamic.

Editor’s Note: If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.

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About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions.