Fewer planted row-crop acres could improve prices for farmers

Acreage for three of Arkansas’ top row crops — rice, cotton, and soybeans — has dropped nationally as the harvest is set to begin, according to a report from the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS). The drop in acres led to price spikes for those commodities, according to NASS’s Crop Production report.

Long-grain rice projections were reduced by 100,000 acres and the soybean crop projection dropped 580,000 acres. Arkansas is the top rice producing state in the country, growing roughly half of the U.S. crop each year. Soybeans are the most widely grown crop in the Natural State, accounting for about 3 million planted acres this year. The specific decline in acres in Arkansas has not been tabulated.

The Crop Production Report also lowered the U.S. average rice yield by 41 pounds per acre in September to 7,586 pounds. Arkansas’ total rice yield was reduced by 50 pounds per acre to 7,500. This is down from last year’s 7,630 pounds.

“One of the most eye-catching adjustments was to U.S. long-grain production,” said Scott Stiles, extension economist for the University of Arkansas System Division of Agriculture. “It was lowered 8 million hundredweight this month on a combination of lower acres and yield.”

The market reaction has been positive following the report,” he said. “November rice closed about 11-cents higher on Monday at $17.70 per hundredweight.”

Despite the downward projection on acres, Jarrod Hardke, extension rice agronomist for the Division of Agriculture, said the new numbers are within projections. The decline in yields was expected as well.

“The lowering of acres still keeps things around the 1.1 million acre mark we were projecting,” he said.

“As for yield, the reduction now puts the projections within the range we expected, which was similar to the few years preceding the record yields of 2021,” he said. “Still very good yield potential but not going to challenge last year’s yield record. Given that we still have a large amount of the crop to harvest, much remains to be seen on where the yields really are.”

On the U.S. long-grain balance sheet, there were also some reductions to demand. Domestic use was lowered 3 million hundredweight and exports trimmed by two million.

“The net result was a 2.8 million reduction in ending stocks to a total of 20.9 million hundredweight — the lowest since 2019,” Stiles said. “The long-grain average producer price for the ’22-‘23 marketing year is projected to be a record $7.43 per bushel.”

Adverse weather in rice-growing regions of China and India have also made an impact. Rice production in India and China combined has dropped by a combined 4 million metric tons, the USDA reported. India’s export projection has been dropped by 2 million tons, Stiles said. Those drops have also fueled price spikes.

For soybeans, U.S. harvested acres were reduced 580,000 this month and the U.S. yield was reduced by 1.4 bushels per acre to 50.5. Total production was lowered 153 million bushels to 4.378 billion. Stiles said most of the reduction was due to excessive heat and dry conditions in the western Corn Belt states.

“The biggest bean yield reductions were pretty much in the corridor from Texas to South Dakota — the area most impacted by drought this year.”

U.S. soybean stocks are projected to be tight at 200 million bushels in the ’22-’23 marketing year. USDA projects the average producer price for the 2022 crop to be $14.35, the second highest on record and the highest since 2012.

As Arkansas approaches the cotton harvest, the state saw a bump in the number of projected harvested acres from 490,000 to 630,000.

“Overall, the U.S. harvested acres increased 747,000,” Stiles said. “Most of that came from increases in Texas, Arkansas and Georgia.”

That’s a significant increase from the August USDA report that had the total U.S. cotton acres at their lowest since the Civil War. The difference is attributed to information reported by farmers to the FSA. Arkansas’ yield was increased to 1,219 pounds, up from 1,195 last month, which was below last year’s record of 1,248. The U.S. yield was lowered 3 pounds to 843 per acre.

The supply and demand numbers from USDA were not bullish. With the increase in harvested acres, production was increased by 1.26 million bales to 13.83 million. Ending stocks were increased by 900,000 bales to 2.7 million. Stocks are still historically tight and the lowest since 2013.

“USDA projects a record price of 96 cents for the ’22 crop,” Stiles said. “December futures closed 87 points higher today at $1.0571.”

Bill Robertson, extension cotton agronomist for the Division of Agriculture, said the report had one surprise.

“I was expecting an increase in cotton acres,” he said. “I was not expecting the lint yield increase. We’ve seen some fields getting close to harvest, but none harvested. These fields are looking good — not as good as last year but pretty good.”

Timely irrigation played a significant role for fields that are looking good right now, he said. During the last few years, defoliation has only picked up steam in mid-September, Robertson said. This year appears to be following that trend.

“The high-pressure system that is sitting on top of us now and for the next week or so will help get things rolling,” he said.