U.S. farmers are expected to plant a record amount of acres this year to take advantage of high agricultural prices after years of tough market conditions.
The USDA projects farmers will plant 182 million acres of corn and soybeans in 2021. That is an all-time high and up roughly eight million acres from last year. Driving the jump is soybean acreage, which is expected to rise nearly seven million acres from last year.
“If realized, this would approach the highest planted soybean area figure on record,” said Mac Marshall, vice president of market intelligence for the United Soybean Board. That record dates back to 2017, when farmers planted 90.2 million acres of soybeans, according to USDA data.
Behind the increase lies a sharp rise in soybean prices over the past eight months—67 percent since June 1. Prices have been lifted by surging demand for U.S. soybeans in China, where the country continues to rebuild a hog herd that was decimated by African swine fever in 2019. As of late February, Chinese buyers had purchased 35.9 million tons of U.S. soybeans since the start of September—up nearly 24 million tons from the same period a year earlier.
“The Chinese are buying even as prices are rising,” said Seth Meyer, chief economist for the USDA. Meyer said that he expects China’s demand for U.S. products to stay strong throughout 2021.
The trend is one indicator among many that financial outlook for agriculture is good in spite of facing a year in which farmers will experience a 45 percent drop in what they will receive in direct government payments compared to last year. The USDA also cautions that its outlook for stronger crop acreage in 2021 is predicated largely on favorable weather conditions in the Corn Belt, which some forecasters do not expect.
That is because of La Niña, a weather phenomenon characterized by cooler-than-normal waters in the Pacific Ocean, which cause dry weather in parts of the globe and heavy rain in others.
Source: Wall Street Journal