U.S. Farmers are Planting More Row Crops Than Ever

Source: By Kirk Maltais, Wall Street Journal • Posted: Thursday, February 25, 2021

Planters wager that rallies in crop prices are just getting started

Soybean prices have risen sharply over the past 8 months. A farmer worked a soybean farm in Wyanet, Ill., in September. Photo: Daniel Acker/Bloomberg News

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 U.S. Department of Agriculture projects that 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—driven by a jump in 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—69% since June 1, with the most-active contract on the Chicago Board of Trade trading at $14.26 per bushel on Wednesday, the highest level since July 2014.

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 last week, 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, at a press conference during the USDA’s Agricultural Outlook Forum last week. Dr. Meyer said that he expects China’s demand for U.S. products to stay strong throughout 2021.

For Tim Bardole, who farms 2,500 acres of soybeans and corn in Rippey, Iowa, the choice to plant more soybean acres this spring is both economic and practical. Mr. Bardole says that 60% to 65% of his acreage will be soybeans this year, higher than usual after a derecho—a fast-moving summer wind storm capable of hurricane-force winds—hit Iowa and caused around $500,000 of damage to his farm, forcing him to destroy 600 corn acres.

“It’d be too risky to try and grow corn again,” said Mr. Bardole. “We really don’t have much choice after the derecho.”

High soybean prices are a hopeful sign for farmers after some tough years. In 2020, 552 chapter 12 bankruptcy cases—a chapter of the bankruptcy code designed for farmers—were filed, down 7% from the previous year but still the third-highest total in the past decade, according to data from the American Farm Bureau Federation.

Net farm cash receipts, the money made by selling crops, are expected to rise 5.5% or $20.4 billion in 2021, according to the Federal Reserve Bank of Kansas City.

“The ag economy has entered this year with one of the strongest financial outlooks in years,” said Nathan Kauffman, vice president of the bank, at last week’s USDA forum.

A 45% drop in the amount of money sent to farmers in the form of government aid, however, will lower net farm income by 5.8% in 2021, according to the bank. And the USDA cautions that its outlook for stronger crop acreage in 2021 is predicated largely on favorable weather conditions in the Corn Belt—which some forecasters don’t expect.

That is because of a weather phenomenon known as La Niña, characterized by cooler-than-normal waters in the Pacific Ocean, which causes dry weather in some parts of the globe and heavy rainfall in others.

“[The] western Corn Belt [will] have a hot, dry summer due to La Niña,” said Jim Roemer, head of Best Weather Inc.

Write to Kirk Maltais at Kirk.Maltais@wsj.com