2023 and the ag economy combine to produce some trepidation as we look to next year. While the ag economy is doing okay despite several challenges like supply chain delays and high input costs, the question is how long this will last into next year. I talked with David Widmar, an agricultural economist with Agricultural Economic Insights in West Lafayette, Indiana.
There are no doubts that commodity prices are showing a lot of volatility at the end of this year, and Widmar says that’s causing a lot of angst. However, it’s generally still a positive story in the farm economy. But what’s ahead next year?
“We do expect that positive story to continue into 2023,” he said during the 2022 National Association of Farm Broadcasting’ annual convention in Kansas City. “One of the biggest reasons why is tight commodity inventories across all commodities in the U.S. and globally.”
The problem is when things get tight for corn, soybeans, and wheat, we really can’t substitute one crop for another. All of those crops will want to maintain their acreage shares. The idea of “robbing Peter to pay Paul” won’t work.
“We can’t plant fewer corn acres to make up for soybeans or vice versa,” he said. “So, everything is tight, and that will continue to be part of the narrative going into 2023.
“We know one thing about2023,” Widmar added. “There will come a point when we oversupply. We’ll bring in new production acres around the world, including South America, Southeast Asia, India, and hopefully Russia and Ukraine in the long term.”
The other thing that will eventually affect the markets is the possibility of big yields. There’s been a recent run of average to slightly below-average U.S. corn yields. “Eventually, more acres and yields will push us over again.”
Here’s the entire conversation during the NAFB’s Trade Talk event in Kansas City.
Commodities and sports typically don’t go together most years. However, this fall, the two topics have come together in an interesting way.
Being a long-time sports broadcaster, I’ve noticed that when the major sports seasons wrap up, certain sports media love to immediately do what they call a “way-too-early” look to the next season. Evidently, it’s not just a sports thing.
I know harvest is just ramping up in many areas as I write this, but Farm Futures took what some might think is a “way-too-early” survey of planting intentions for 2023, and I couldn’t pass it up. It looks like corn will be king once again next spring among all commodities.
Jacqueline Holland is the grain market analyst for Farm Futures, and she wrote an article about the survey. She says the way-too-soon survey results are favoring corn for spring planting despite some challenges that come with the commodity.
“Even with higher fertilizer prices, farmers are still prepared to go all-in on corn,” she said. “Our survey found that farmers expect to plant 94.3 million acres of corn, a five percent increase from USDA’s current acreage estimates.”
If that prediction is realized, it would be the most corn planted in the U.S. since 95.4 million acres went into the ground in 2013. While soybean acres will be behind corn next year, U.S. growers are still sowing a lot of beans during spring planting in 2023.
“We expect farmers to plant 87.3 million acres of beans,” Holland said. “That’s almost a one percent decrease from this year’s acreage.” Cotton is one of the reasons that soybean acreage is going to drop a little. In the Mississippi Delta, a lot of acres in that region are going to provide “stiff competition” for soybeans during spring planting.
They also expect wheat acres to rise in 2023 thanks to more winter wheat acres in the Eastern Corn Belt. Farm Futures expects growers to plant 36.6 million acres of winter wheat. With more winter wheat acres going in the ground, spring wheat acres will back up from this year, with the 2023 estimate at 12.3 million acres.
“That means a grand total of 48.9 million acres of wheat will be planted in 2023,” she said.
Holland admits she was a little surprised at the survey results. She says there was a lot of price responsiveness to the rapidly-rising fertilizer prices heading into spring planting this year.
“When farmers were making their planting decisions in December last year, soybean prices were rallying strongly,” Holland recalled. “But with all of the issues we’ve seen with the flow of corn in the Black Sea this year, as well as the U.S. corn crop struggling with drought, corn has some bullish prospects for next year.”
She says if we do see a larger corn acreage next year, that might lead to some expansion back in the cattle market. In turn, that would likely revive some corn acreage in the Plains. Remember, about three million acres of corn went into prevent plant in the spring of this year.
“A lot of those acres were in the Dakotas and Minnesota,” she said. “Barring another bad weather event next year, I expect those acres to go back into corn in 2023.”
Farm Futures also has other questions in their survey beyond commodities and planting intentions. Those questions include where farmers are headed with input costs next year. Based on the survey responses, Holland says profit margins are going to shrink next year. The question is, how much?
“As of right now, it doesn’t look like growers are going to skimp on any fertilizer applications,” Holland said. “Most responses show farmers are ready to lock in their fertilizers at the lowest prices they can get. That will hopefully keep at least some liquidity in these crop budgets.
“We’ll see how these things ultimately shake out for planting and commodities,” she added. “There’s a long time between now and next spring.”
Planting questions abound here in the late stages of winter. How many acres of corn, soybeans, wheat, and other crops will get planted in 2022? The acreage battle is a hot topic of conversation in the markets and in coffee shops across rural America. This year’s acreage battle is far from over and actually began last year.
That’s the opinion of Joe Vaclavik of Standard Grain in Nashville, Tennessee. The long-time market expert says this has gone on for months for a variety of reasons, led by fertilizer issues.
“Even going back to last fall, the market was very aware of upcoming fertilizer challenges,” he said on the phone from his Nashville office. “It was widely known that fertilizer prices were rising rapidly and would have an impact on this year’s acreage mix.”
He said for a moment in time, they saw the ratios and new-crop prices seem to favor corn. It appeared the market was trying to buy corn acreage back because of the potential of losing acres due to fertilizer prices. The fact of the matter is no one has a clue what the crop rotations are going to look like.
“There are several well-respected analysts like the University of Illinois that had an estimate of 96 million corn acres,” he said. “That would be an increase near 2.5 million over last year.
“And then, Farm Futures did a customer survey and came away with an estimate of 90 million acres,” he added. “The difference between 96 million and 90 million acres in terms of pricing implications, balance sheets, and fundamentals is phenomenal. Those are two totally-different markets and totally-different worlds.”
In any given year, Vaclavik says trying to predict or estimate what the acreage will be is a near-impossible task. Occasionally, someone will predict accurate numbers, but no one is consistently accurate. There are always “curveballs,” and this year will feature more curveballs than ever.
“This uncertainty doesn’t just apply to corn and soybean acres,” he said. “You have another bunch of crops that also make money for farmers. Spring wheat makes money; oats make money; small grains make money.”
The “other piece of the pie” among the planting questions is that principle crop acreage has trended lower for the last 7-8 years. Things are in a state of flux, and he feels the unknown might actually be more supportive than not for the markets. The fertilizer question and its impact depends on where you’re located.
“I’ve talked to people who have their fertilizer needs covered, and they feel good about the situation,” Vaclavik says. “The thing is that most farmers really don’t want to change their rotations. I did a survey of my customers a while back and most said they’re rarely in favor of switching rotations, if ever.
“If they can stick to their rotations, that’s what they’ll do,” he added. “But it still could be tricky.”
Even a farmer who’s already locked in their fertilizer for the 2022 season can still run into fertilizer problems. Actually, getting the physical delivery of that product could be a different story because of serious supply chain issues.
Corn is also a more input-intensive crop, so farmers can’t have their fertilizer not show up when it’s time get moving on spring planting. While not everyone is going to struggle to get fertilizer, there is still a risk going into springtime. Consequently, fertilizer will be a major deciding factor in answering those planting questions.
Small grains could be an interesting topic in the spring. Vaclavik says he would not be surprised to see more spring grains in the acreage mix. One thing that people might not be talking about a lot is some of the northern United States and even into Canada are still experiencing drought.
“Things are still dry in the Dakotas and over the border in Canada,” Vaclavik said. “They are still in a drought, and that will be an additional factor when it comes to acreage. It all depends on what farmers are comfortable planting into the dry conditions. I know it’s not as bad as last summer, but there is still a drought in that region.
“I haven’t seen a year like this in recent memory where it’s so hard to predict the answers to the planting questions that we’re asking,” he added.
Drought to an average person likely means “it’s dry.” And that’s fair. However, what you may not realize is drought, to a farmer, might mean “we’re struggling to stay in business because of something we literally have no control over.” It’s understandably a situation that non-farm folks have a hard time relating to.
The National Association of Farm Broadcasting’s News Service and the American Farm Bureau Federation undertook a project this month to put a human face on the challenges of drought, especially in the Western United States. That area of the country has been clobbered by a long and intense spell of dry weather.
Tyson Roberts is a farmer from Layton, Utah, who’s seen the challenge firsthand because he’s living it right now. I jumped on the phone with him on Tuesday of this week for an interview about what it’s like to face a drought of this magnitude. While drought is a big topic of conversation in 2021, he said the dry spell stretches back to 2021.
“We got started with this last year,” he recalled while on the phone from his Utah farm. “A lot of people may not realize that.”
It wasn’t quite as bad last year as it is in 2021. The water available for Roberts’ crops was below normal levels in 2020, but they still grew “pretty much” all of the crops that they would in a normal year. This year has been markedly different.
“We are a vegetable operation here,” he said, “and we grow fresh market vegetables for farmer’s markets.
“When you think about a tradition row crop farm, the producer plants in the spring and harvests in the fall,” Roberts says. “We work a little differently: we’ll start planting different vegetables in the spring and continue through most of the summer and into August.”
Their typical planting schedule came to a sudden stop. Roberts, the sixth generation of the Roberts family to work the farm in Davis County, Utah, got to the middle of June and figured out they wouldn’t have enough water to sustain the crops they have growing and grow the additional crops they’d be planting through the month of July.
“We ended up putting all of our planters away around the first of July,” he recalled. “About 20 percent of our property remained unplanted. We fallowed it because there just isn’t enough water to grow the amount of produce we normally plant in a given year.”
As someone who doesn’t live on a farm, imagine having to give up 20 percent of your income due to circumstances you had no control over. I don’t know about you, but a 20 percent drop in income would likely throw me out of my house and into the street.
The drought hasn’t forced Roberts to destroy any crops, but it has forced him to leave some crops in the field because they’re not harvestable quality, which amounts to the same thing. He offered up his sweet corn crop as an example.
“About 2/3 of the top part of our fields are pretty good quality and should get us good yields,” he said. “However, on the bottom end, we haven’t had enough water for all of the other plants. I guess you’d say we couldn’t get the water all the way to the end of the row.
“We’ve lost a lot of yield and in quality,” Roberts added. “In addition to the unplanted ground, there’s also a portion of the planted crops that are unmarketable.”
Crop farmers get paid when they harvest crops. Can you imagine knowing ahead of time that the one check you get for harvesting your crops won’t pay your bills? That’s what farmers face every year. These are the people that grow our food. It’s a rough way to earn a living.
He sums up the situation on his farm rather succinctly: “We’re in survival mode right now,” he said grimly. “With the unplanted acres and the loss of yield, we’re just trying to stay afloat. And I think that’s fair to say for a lot of farmers around us and across the state, as well as throughout the Western U.S.”
So how do farmers like him find a way to keep moving forward and get through this?
“I serve on the Utah Farm Bureau Board of Directors, and we met last week to discuss how we can help keep our farmers in business,” he said. “Every state has received a fair amount of COVID assistance, which is some help. We’re looking at the best ways to help the livestock farmers, the crop farmers, and get them the help they need.
“We’re looking into government programs to help them stay in business,” Roberts added. “I hate to say it, but sometimes a company or a farm may need a little help staying afloat when they face the challenges that we have for nearly two years.”
Roberts and his wife, Danna, have six children who each help on the farm, and Tyson’s parents, Dix and Ruth, also operate the farm with him.
Planting crops and grain stocks were a topic of conversation in the markets this week. The USDA issued its Prospective Planting and Stocks Reports, with the biggest surprise coming from the planting numbers. Corn planting is estimated at 91.1 million acres, up less than one percent from a year ago. Mike Zuzolo is the President of Global Commodity Analytics in Atchison, Kansas. He says the trade was expecting more corn acres in the report.
“I think that’s right. Look at the news wire estimates. The lowest number we saw was down around 91 million acres. I don’t publish to the newswires anymore because the algo-traders use them to position themselves before the numbers come out. I send stuff out to the producers and investors that I work with. So, I was below 92 and having a really tough time going above 91.5.”
He says one reason farmers may be shying away from more corn acres is the quickly rising cost of inputs. However, corn wasn’t the only surprise in the planting report.
“What was surprising to me is how did the soybeans come in at 87.6 million planted, when the trade, including myself, were closer to 89 and 90 million. What happened was most of the other producers in other parts of the country, including the cotton producer, the sorghum producer, and the rice producer all ‘stayed in their lane’ this year and they kept planting what they normally produce. I think this brings with it a little more questioning, especially with that Deep South looking wetter than normal from the Tennessee River Valley down to Louisiana, so we’re going to have to keep an eye on that because soybean acres could grow, similar to the way corn acres could grow because the of the way the weather is shaping up.”
He says the Deep South weather picture looks wet, while the main corn and soybean areas, especially in the Plains States, are leaning toward a drier pattern.
Zuzolo was disappointed in USDA’s prediction of 46.4 million all-wheat acres, the fourth-lowest planted area since records began in 1919.
“I think the big thing we saw in the planting that I’ll wrap up with, and this is where we have a leader to the downside, and that is the wheat market. We wanted it to be the leader to the upside with the drought in the High Plains and Central Plains and in the hard red wheat belt specifically, driving prices higher and make corn that much more expensive, not allowing wheat to get into a feed category. But unfortunately, we are seeing the wheat-corn spread dip into the 50-60-cent per bushel range. Soft red wheat minus corn, that is feed category for wheat, that is the lowest since late 2017.”
Corn planting totaled 91.1 million acres, up less than one percent from a year ago. Soybeans are estimated at 87.6 million acres, up five percent. All wheat acres are 46.4 million, up five percent. The all-cotton planting projection for 2021 is 12 million acres, one percent lower than last year.
The Stocks Report showed corn stocks down three percent from last year, soybean stocks down 31 percent, and all wheat stocks were seven percent lower than 2020.
“I was glad that the soybeans came in a little bit higher and would rather have it that way, and the wheat a little bit higher than the corn. The corn came in at 67 million bushels, 37 million bushels light, versus the average trade guess. And so, that keeps your old crop corn well bid.”
Corn in all positions totaled 7.7 billion bushels, down three percent from last year. Soybeans stored in all positions were 1.56 billion bushels, 31 percent lower than last March. All wheat stored in positions totaled 1.31 billion bushels, seven percent lower than last year. Durum wheat stocks in all positions were 42.7 billion bushels, 17 percent lower than last year.
Again, that’s Mike Zuzolo of Global Commodity Analytics in Kansas.
Seed packages that Minnesotans didn’t order are still coming into the state in steady numbers from China. Many of the seeds are non-invasive species. However, that doesn’t mean they can’t carry some kind of a pest or disease with them.
Reports are still coming into the Minnesota Department of Agriculture (MDA) that say citizens continue getting unsolicited seed packages in the mail. To date, over 700 Minnesotans found the seeds in their mailboxes and reported it to the MDA.
The packages contain a variety of seeds. Seed analysts at the MDA Laboratory say some of the seeds are cosmos, radish, mung bean, juniper, basil, cucurbit, and zinnia. Seeds like these are not invasive plants. However, they can carry disease and pests can hide in packaging. The unsolicited seeds likely haven’t gone through proper inspection channels to enter the country legally. The labels typically say something like jewelry is inside.
The MDA is working with the United States Department of Agriculture (USDA) on the issue. Minnesota is sending all the collected seeds to the USDA for additional identification and destruction. Federal officials are investigating the source of the seeds, and the USDA is currently referring to the situation as a “brushing scam.” In that type of scam, people get unsolicited items from a seller who then posts false customer reviews to boost sales. Their latest statement on the seed packages can be found here.
Those receiving the packages have indicated they either never made an online seed order or they purchased seeds online earlier in the year but never got them. Their order information indicates it is still unfulfilled.
Minnesotans should take the following steps to deal with unsolicited packages of seeds.
Save the seeds and the package they came in, including the mailing label.
Do not open the seed packets.
Do not plant any of the seeds.
In case the package is already open, place all materials (seeds and packaging) into a tightly-sealed plastic bag.
If you have planted the seeds you received, please destroy any plants that have germinated. Plants and soil aren’t eligible for most trash collection. However, in this unusual situation, pull up the plants, double bag them and the surrounding soil, and dispose of everything in the trash. Do not compost the seeds, plants, or soil. Please notify the MDA if you have disposed of any seeds or plants through our contact form.
You should always buy seeds from a reputable source. Minnesota law says all seeds sold in the state need correct labels. People selling seeds need to have a permit from the MDA. You can look up seed permit holders on the MDA website. Never plant unlabeled or unknown seeds.
Grain Markets officially bid 2019 a not-so-fond adieu. Like most other segments of American agriculture, grain farmers are more than happy to put 2019 in the past. Joe Vaclavik, founder and president of Standard Grains in Chicago, says last year didn’t start off well in the grain markets and it just kept going for the next 12 months.
“We had a pretty comfortable, if not burdensome supply situation entering the calendar year, so, the calendar year kind of began similar to what we’ve seen the last two, three, four years, a comfortable supply-demand situation, not anything terribly tight. Low prices, farmers not making a ton of money, you got the trade war going on, a lot of overall negative factors I would say to start the year.”
He says the spring is when things began to get “interesting.”
“Both in the markets and the weather. We basically sold the markets off until about that May time frame, that I think traders started to realize that we had some serious weather problems. Wet weather, cold weather, planting delays continued, and typically we are always told the crop’s always going to be planted, and planting delays are not a cause for concern.”
However, as the spring continued, things turned more serious in the markets.
“Planting delays turned into a major concern. There was a point in time in late May into maybe the mid part of June where we just had no clue what type of production was possible, and out of that, we had a very significant crop scare rally in the corn market and in the soybean market, to a lesser extent.”
Farmers continued to plant corn long past what would be a normal planting date. Vaclavik says the market was rallying as farmers continued to plant, even into early July in a few locations. He says the market peaked in June because it bought a “whole bunch of corn acres” that wouldn’t have been there otherwise.
Vaclavik says farmers faced challenges from a weather standpoint, logistics, and from a demand standpoint with trade challenges in 2019. With all that stacked against them, the question is how much grain U.S. farmers produced last year. Vaclavik says the answer depends on who you ask.
“A lot of people think that the numbers USDA has put out are just not achievable given the late planting, the wet spring, the late harvest, so there’s still some debate out there. I’m not one to tell you with any degree of certainty that we know for sure what the crop is, and we’ve got this big report on January 10, which is the final crop production report, and I suppose if USDA is going to make any sort of sweeping adjustment, it probably comes on that date.”
Again, Joe Vaclavik is the president of Standard Grains in Chicago.
Dicamba is an important tool for farmers when it comes to controlling weeds. The Minnesota Department of Agriculture (MDA) wants to remind pesticide applicators of the state-specific dicamba cutoff for the 2019 growing season. Product application cannot take place in Minnesota after June 20.
The 2019 Minnesota dicamba cutoff is in addition to those established by the U.S. Environmental Protection Agency (EPA). The affected formulations are XtendiMax by Monsanto, Engenia by BASF, FeXapan by DuPont, and Tavium by Syngenta.
“We understand that late planting this season has caused concern for growers who want to use this crop management tool,” said Agriculture Commissioner Thom Petersen. “However, delaying applications in an attempt to control later emerging weeds can result in poor control and presents other risks. If you are one of the growers that has invested in dicamba technology, now is the time to use it for the dicamba cutoff date. The University of Minnesota Extension says late planting combined with pre-plant tillage can offer advantages for weed control.”
The June 20, 2019, the dicamba cutoff date is based on the MDA’s ongoing investigations and informal surveys into reports of crop damage from alleged dicamba off-target movement over the past two growing seasons. In 2017, the MDA received 253 reports of alleged dicamba drift; 55 of those were formal complaints requesting investigations. Those reports impacted an estimated 265,000 acres. After state restrictions were put in place for the 2018 growing season, the number of complaints dropped dramatically to 53 reports, of which 29 were formal complaints. Just over 1,800 acres were impacted in 2018.
This year’s dicamba cutoff date was first announced on December 10, 2018. Over the winter, approximately 5,800 pesticide applicators attended trainings across the state as required by the product labels.
Dicamba is most effective early in the growing season. Product labels recommend application on small broadleaf weeds that are up to 4 inches tall.
To manage weeds after June 20, growers can use herbicides from Group 9 (Glyphosate), Group 2 (Pursuit, Classic, FirstRate), and Group 14 (Flexstar, Cobra, Cadet, Ultra Blazer). If you have herbicide resistant weeds such as water hemp, follow University of Minnesota Extension recommendations on layering of residual herbicides such as Dual, Outlook, Warrant, and Valor.
In Minnesota, the XtendiMax, Engenia, FeXapan, and Tavium formulations of dicamba are “Restricted Use Pesticides” for retail sale to, and for use only by, certified applicators.
Summer workshops will teach farm stress management skills
Farmer stress levels are way, way up. They’re living with weather that won’t let a great many of them get crops in the ground. Overseas trade wars have cut down on places to sell their commodities, leading to a lot of grains and oilseeds on hand, driving prices even lower. Farmer stress is something that mental and even physical health professionals may not have the experience to help them with, so the Minnesota Department of Agriculture is trying to help with that.
Farmer stress is as high as it’s been since the 1980s. Stressful times in agriculture can trigger bad news and difficult conversations. In response, the Minnesota Department of Agriculture (MDA) is offering Navigating Conflict & Tough Conversations in Agriculture, a workshop designed to help agriculture professionals navigate potentially contentious situations.
It’s Rough in Rural America
“Farmers are having a tough time right now,” Agriculture Commissioner Thom Petersen said. “Farmer stress is high because there’s a lot on the line, and we recognize that lenders, agency staff, clergy, educators, veterinarians, agricultural advisors, and businesspeople can find themselves trying to help in situations where emotions run high.”
Workshop topics include reducing anxiety and fear about interpersonal conflict; understanding how self-awareness and group dynamics contribute to successful outcomes; exploring the connection between conflict and change; and precautions participants can take to keep themselves safe at work – both in and outside their office.
University of Minnesota Extension Educator Denise Stromme and local law enforcement will teach the workshop on dealing with farmer stress at six locations in June and July. All sessions run from 9 a.m. – 12 p.m.
June 18, Detroit Lakes, Minnesota Community & Technical College
June 19, Thief River Falls, Northland Community & Technical College
June 20, Duluth, Lake Superior College
July 8, Marshall, Southwest Minnesota State University
July 9, Faribault, South Central College
July 10, St. Cloud, Saint Cloud Technical & Community College
Listen, I grew up working on a dairy farm and got to understand farmer mindsets. It’s no fun to admit you need help. If there’s a group of Americans who have “John Wayne” go-it-alone-syndrome more than farmers do, I’d like to know who that would be. They don’t want to ask for help. It’s important that health professionals get the background information they need at a workshop like this. The stresses that they deal with are very unique and it’s quite difficult for non-farm folks to relate to. I’ve seen it first hand, living in both rural and urban areas through my 48 years of living.
All participants will receive certificates of attendance; several organizations have approved continuing education credits.
Individuals with a disability who need a reasonable accommodation to participate in this event should contact Stephen Moser at 651-201-6012 or through the Minnesota Relay Service at 711 as soon as possible.
Disclaimer
This workshop is supported by the Minnesota Department of Agriculture and the National Institute of Food and Agriculture, U.S. Department of Agriculture, under award number 2018-38640-28416 through the North Central Region SARE program under project number ENC18-170. The MDA and USDA are equal opportunity employers and service providers. The opinions, findings, conclusions, or recommendations expressed in this workshop do not necessarily reflect the view of the U.S. Department of Agriculture.