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Scott Irwin Profile picture
@ScottIrwinUI
Jun 22, 2021 • 11 tweets • 4 min read • Read on X
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1. Back on crop acres with new #FDD article this week. Tried to figure out what happened to the 14.4 million acres that left US crop production after 2014. farmdocdaily.illinois.edu/2021/06/where-…
2. Here is my accounting of total US crop acreage. Notice that total was pretty stable from 1998-2014 around the average of 359.4 million acres. Then down down down through 2020. Total drop after 2014 of 14.4 million acres through 2020.
3. Started analysis with acres going into and out of CRP. Anything funny going on there. The answer is yes. Should be an inverse relationship between CRP and principal crop plus prevent plant acres. This held through 2014, then both declined. What gives?
4. Fortunately USDA has done research tracking every acre of CRP ground that expired from 2013-2016. Vast majority back into crops of some kind. My conclusion: drop in principal crop acres was so big that it swamped the positive impact of acreage coming out of CRP after 2014
5. Next step was to look at where the drop in total crop acres was the biggest after 2014. As this map shows, declines in all but a handful of states. But biggest declines mainly in Great Plains states. Important clue about what happened to the missing acres.
6. So I next looked at planted acreage changes for major crops in top 10 states with loss of total crop acres between 2014 and 2020. Large drops in wheat and hay acres pretty much across the board in these states.
7. So my conclusion is that the drop in total crop acres after 2014 in the US can be mainly traced back to decline in wheat and hay acreage in the Great Plains. Not the entire story but the main story.
8. So why should anyone in the market care about this? The reason is that total size of "acreage pie" constrains acreage of all crops, including corn and soybeans. Unlikely that a big pool of additional acres is sitting out there this year to increase the size of pie.
9. But those 14.4 million acres are sitting out there and could come back into production at some point in the future.
10. My forecast of total crop acreage for 2021 after adjusting for downward bias in March numbers. From an earlier article. So I expect total crop size in June report to go up 2.8 million acres. But that is it. Will see next week!
11. Meant to also add that we don’t know exactly what happened to the crop acres that went out of production. Most likely pasture fallow or range.

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More from @ScottIrwinUI

Scott Irwin Profile picture
Jan 10
1. Count me as one of the people very surprised about the NASS revision of the US corn yield by 3.4 bpa. I was definitely on the side of big yield all summer. Clearly, late dry weather dinged yields, but this much? That is the question.
2. Lots of discussion in the trade this fall about the impact of harvesting low moisture crops on yields. In theory, everyone should be discussion yields standardized to 15% moisture. The USDA does this for the objective yield (field sample) estimates. However, they take what farmers report to them based on whatever moisture assumption farmers make. This may bias yield reports from farmers down compared to standard 15% moisture bushels. This would in turn bias USDA yield estimate overall downwards. Any bias would be amplified in January report (today) because it is mainly based on the large December agricultural survey of farm operators.
3. If this is actually happening, then if the bias is large enough, it may show up in quarterly grain stocks reports which are supposed to be based on pounds of 56 standard moisture bushels. There could be a clue in that regard in today's corn grain stocks estimate. The Dec 1 grain stock estimate today was 12,074 million bushels. The average trade expectation was 12,147 million bushels. This looks like a bullish surprise of 74 billion bushels because stocks are 74 million less than expected.
Read 7 tweets
Scott Irwin Profile picture
Oct 24, 2024
1. I have been reading lately some market commentary that the USDA is going to have to lower corn and soybean yield estimates in Nov or Jan due to so much being harvested at below standard moisture levels. So, how likely is this to actually be true?
2. A simple example will clarify things. Assume a farmer delivers 14,000 lbs. of corn to the elevator from one acre of production. 14,000/56 = 250 bushels. Let's further assume that the moisture level is 13%. This means that the 14,000 pounds delivered to the elevator contains 1,890 pounds of water and 12,110 pounds of dry matter.
3. Since No. 2 yellow corn is conventionally priced at 15% here in the Corn Belt, let's figure out the number of bushels if the farmer could have harvested the corn at exactly 15% moisture. The dry matter pounds would be exactly the same on the one acre of production---12,110 pounds. If you do a little math, you can figure out that a water content of 2,143 pounds yields 14,286 pounds total delivered to the elevator. 2,143/ 14,286 = 15% moisture. In this alternative case, the yield on the acre of corn is 14,286/56 = 255.1 bushels.
Read 10 tweets
Scott Irwin Profile picture
Jul 12, 2024
1. We keep getting rain around here. About a half an inch last night. We are pushing 7 inches this week in Champaign County. I went out to what I call the Field of Dreams to walk our dog this morning and it is still hard to believe how good the corn and beans look. But, call me paranoid, this got me thinking about whether we were starting to get too much rain this month?
2. So, you know me, I ran back to my computer and starting digging out the data to check out the relationship between July precip and corn yields. I was relieved to see that, no, we are not in the territory of too much July precip. Image
3. Note that the y-axis is deviation from a simple linear trend over 1980-2023 for the Illinois state average yield. Precip is the average for the state too. The data scatter shows that there is no real dip in trend deviations all the way out to about 8 inches. I know the quadratic regression I used shows the yield deviation turning down above six inches of July precip but that is more the result of forcing this functional form on the data, which probably is better modeled by a linear function up to around 5 inches and then going flat.Image
Read 5 tweets
Scott Irwin Profile picture
Jul 8, 2024
1. Man, I really hate to do this tonight after a day like this in the grain market. But we gotta start talking about the potential scale of financial losses for producing corn and soybeans in 2024. This is an updated budget from this FDD: farmdocdaily.illinois.edu/2024/06/revise…
Image
2. I am going to use the following yield/price combinations just to get the convo started. Corn: 240 bu./$3.70. Soybeans: 75 bu./$10.30. I use higher yield expectations based on the expectation that Beryl rains will go a long ways to improving prospects. Mr. Market sure thinks so. Without taking into account LDP and crop insurance proceeds, this results in estimated farmer returns of -$244/acre for corn and -$98/acre for soybeans. For farms with 50/50 rotations that results in average farmer returns for all acres of -$171 per acre.Image
3. We are getting close to where 85% crop insurance policies will trigger based on price alone. Feb price was $4.66. For the 85% policy, Dec 24 futures have to drop to $3.96 to trigger payments at APH yields. With the increased yields I used, looks like still aways to seeing insurance payments. But need to wait for my colleagues who are much more expert in this regard to chime in. My sense is that crop insurance right now is not likely to help much. I am not sure about ARC/PLC payments. Maybe more help there.
Read 5 tweets
Scott Irwin Profile picture
Mar 20, 2024
1. I guess today is the day to talk about corn yields. Just received an email from @aaea announcing a new Choices article "A Slowdown in US Crop Yield Growth" by David Boussios. Here is the link: choicesmagazine.org/choices-magazi…
2. The author of the Choices article argues: "The statistical evidence of a productivity slowdown in crop yield growth builds each year. The linear yield growth trends since 2013 for corn, soybeans, and wheat are all statistically lower than one starting in 1988. Models, forecasts, market participants, and policy makers should consider that yields in the future will probably be lower than forecasted by the USDA and that extrapolating trends into the future without revision is problematic."
3. This argument is especially interesting because I have seen similar arguments in the grain trade in the last few years. We can all agree that the US average corn yield has been relatively flat since around 2013. That is obvious looking at a chart of corn yields. But one has to be extremely careful in then leaping to the conclusion that productivity growth in corn yields has also slowed. The reason is that runs of poor or good weather can mask the true underlying trend in small samples of years.
Read 7 tweets
Scott Irwin Profile picture
Nov 1, 2023
1. Recommended Reading for the Day: Fascinating new FDD from my colleagues on the farmdoc team, led by Carl Zulauf. Long-term look at real crop prices. farmdocdaily.illinois.edu/2023/10/the-po…
2. It has long been a staple of economic thinking that real (inflation adjusted) commodity prices have a strong tendency to decline over time. Probably the most famous example of in this regard is the bet about real commodity prices between Julian Simon and Paul Ehrlich in 1980. See the details here:
3. Carl and team put together the data for a USDA index of real crop prices going back to 1912. This is the chart shown below. Lots of interesting history here, but the 30 year period of stable real crop prices that began around 1990 is unmistakable. The question is whether this is a pause in a very long run downward trend or something new.
Image
Read 8 tweets

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