While much attention has been given to the huge increase in fertilizer prices, University of Illinois ag economist Scott Irwin doesn’t think it will translate into a large decrease in corn acreage in 2022, nor to fewer acres planted overall.
In the first of the university’s 2021 Illinois Farm Economics Summit webinars Nov. 29, Irwin said while the price of fertilizer is expected to add $100/acre in input costs to corn, fertilizer will also cost soybean growers $50/acre more.
Like this year, he expects corn will be at least $30 to $40 per acre more profitable than soybeans in 2022.
“Despite an increase in fertilizer costs, I still think overall acreage will increase, and heavy on corn,” Irwin said during the webinar.
Markets are still trying to digest what huge fertilizer price increases will mean to planting intentions in 2022. Irwin said he thinks the market may have overreacted to the impact higher fertilizer prices will have on corn.
He expects that in 2022, Illinois grain farmers will plant 53% corn, 47% soybeans.
Joe Janzen, Extension ag economist, agreed with Irwin’s assessment.
“I don’t expect farmers to idle acres,” he said of reaction to higher input costs.
With today’s commodity prices, farmers will make a “strong effort” to produce corn and soybeans in 2022, he said.
Corn and soybean stocks are relatively tight globally compared to two years ago when commodity prices were lower, Janzen said.
Janzen predicts soybean exports, including to China, will be close to World Agricultural Supply and Demand Estimates (WASDE) projections. But he says exports for corn are more uncertain as China’s real imports of U.S. corn are falling far short of WASDE projections to date. There is uncertainty if China will buy as much corn as it did last year, he said. But soybean exports have been close to projections despite supply chain glitches, Janzen said.
For several reasons, University of Illinois economists are projecting lower prices for 2022-23 corn than WASDE would indicate. Irwin’s estimate of $4.85/bu. for next year’s corn crop is 60 cents lower than the WASDE prediction of $5.45.
He attributes his price projections to the university’s higher estimates of corn acreage planted in 2022 and the university’s higher yield expectations next year. If he is correct, since futures prices are higher now, this would mean a dip in prices this marketing year for the 2022 crop, he said.
His data indicate more than 93 million acres of corn in Illinois next year, compared to WASDE projections of about 91 million acres. Irwin doesn’t think high fertilizer prices will significantly reduce corn acreage, as prices will likely remain strong.
South American grain farmers are making their planting decisions for this season right now, and Janzen doesn’t expect they will reduce planted acreage either.
If there is a “bullish surprise” in crop prices in 2022, Irwin thinks it may be in soybean prices, not corn, because of renewable diesel. It depends on whether all the proposed biodiesel plants are built and start production, increasing demand for soybean oil, he said. If so, he expects demand for soy oil to be strong, with a potential “surprise” bump up in soybean prices.