Soaring fertilizer prices have many debating how corn and soybean acreage will be allocated in 2022. While significant, there are many factors that will ultimately affect producers’ planting decisions between now and next spring – including Mother Nature. Perhaps the easiest factor to overlook, this week’s post reviews winter wheat acreage and potential implications for 2022.
Winter Wheat Acreage
Since 2000, winter wheat has accounted for, on average, 72% of total wheat acres. Since peaking at 65 million acres in 1981 and 1982, winter wheat has been in a decades-long decline, falling to just 30.5 million in 2020. For context, the USDA has reported winter wheat acreage data since 1909, and only once, in 1909, were few acres planted (29.2m).
In 2021, winter wheat acreage increased by 3.2 million acres. Total wheat acres were up 2.3 million acres, up from the 102-year lows of 44.5 million acres in 2020 (spring acres in 2021 were 890,000 acres lower than in 2020).
As a smaller acreage crop – all wheat acres equal to about 50% of corn or soybean acreage – it’s easy to overlook wheat in the larger acreage debates. However, changes at the margin in wheat acreage have a direct effect on other crops – including corn and soybeans. If wheat acreage declines, those acres are planted to the alternative crop. Conversely, increases in wheat acreage result in less acreage of other crops, even if these aren’t in the Corn Belt.
The most recent example of this relationship was between 2005 and 2007 when total wheat acres fell by nearly 9 million acres in just three years. During the same time frame, combined corn and soybean acreage increased 9.7 million acres, during a period when the outlook for corn and soybean didn’t exactly point to a boom era.
Crop Insurance Prices
Perhaps too late for 2021, the upturn in commodity prices has been most evident this fall for winter wheat. For 2022, the base crop insurance price for winter wheat was set at $7.08 per bushel (Figure 2). This is 31% higher than the 2021 price ($4.90) and the fifth-highest observation going back to 2021.
Producers will be considering many factors beyond prices, but the outlook has certainly improved from a year ago.
Ag Forecast Network Question
To help navigate the uncertainty around winter wheat acreage in 2022, we’ve posted the following Ag Forecast Network (AFN) question:
The 35 million-acre threshold represents a 1.4 million acre increase over 2021 (33.6 million acres) and the highest acreage since 2016 (36.1 million).
The AFN tool helps agriculture decision-makers better navigate uncertainty by considering specific questions to define the factors at play. As a reminder, AEI Premium subscribers can calibrate their forecasts and check the Consensus average for all the current 2022 acreage-related questions, which include:
- What is the probability of the USDA’s March 2022 Prospective Plantings Report estimated more than 93.0 million acres of corn (93.3m planted in 2021)?
- What is the probability of the USDA’s March 2022 Prospective Plantings Report estimated more than 87.0 million acres of soybeans (87.2m planted in 2021)?
- What is the probability of the USDA’s March 2022 Prospective Plantings Report estimated more than 180.0 million combined acres of corn and soybeans (180.5m planted in 2021)?
Wrapping it Up
Early signs suggest winter wheat acreage could expand again in 2022. Additional acres planted to wheat could limit an expansion of corn and soybean acreage in 2022.
The primary goal of this post is to point out the 2022 acreage debate will be more complicated than just fertilizer prices. We’ve observed many comments about corn and soybean acreage based on one data point, but the reality is much messier. Producers across the country are making field-level decisions based on current data and future expectations. It’s entirely possible that changes in wheat, cotton, or prevented plant acreage could be a bigger factor in the allocation of corn and soybeans than fertilizer prices. This isn’t to understate the challenges surrounding fertilizer prices but to point out other factors, such as winter wheat acres, that could be at risk of being overlooked.