Midwest farmers are expected to plant a huge corn crop this year.
The U.S. Department of Agriculture predicts farmers will plant nearly 94 million acres of corn this season. That’s up 6 percent from last year’s planted acreage and would be the third-highest planted acreage in the U.S. since the 1940s.
Prices for staples like corn and soybeans have been sliding in recent years thanks, in part, to oversupply. Another gigantic harvest of the Midwest’s most important crop could spell further down times for the farm economy. The Federal Reserve Bank of Kansas City expects farm income to be down, according to a report by the bank’s Nathan Kauffman.
“The USDA projects real net farm income to be slightly less than a year ago; that projection would mark the second-lowest farm income total in more than 30 years,” Kauffman wrote in the report.
Many Midwest farmers are stuck in a bind.
“When you look at current corn prices, you’re at or below the cost of production right now, so it would seem counterintuitive that you would go ahead and increase your acreage if you’re already losing money,” said Paul Bertels, vice president of production and sustainability for the National Corn Growers Association. “But I think what a lot of farmers are looking at, your upside potential particularly on revenue from corn is probably better than it is with (soybeans) right now. So they’re just going to take that gamble.”
The National Corn Growers Association says some of the largest increases in corn acreage is expected in Kansas, North Dakota, Iowa and Illinois.
Roughly 13 percent of the U.S. corn crop was sold as an export in the 2014-15 crop year, according to the U.S. Grains Council. But exports are generally hurting, Bertels said.
“All U.S. exports are kind of at a disadvantage because of the strength of the U.S. dollar,” he said. “If we see the dollar weaken against some other currencies that would definitely help exports. Likewise, if we see one of our major competitors – Argentina, Brazil, Ukraine – have a short crop for some reason, that would also boost our export potential.”
The USDA also expects cotton acreage will be up 11 percent, while soybean acreage will hover around last year’s numbers. The Agriculture Department projects planted wheat acreage to be down 9 percent.
