Corn prices are down, and acres in Texas and across the U.S. are expected to follow as improved overall growing conditions could deliver above average yields, according to a Texas A&M AgriLife Extension Service expert.
Mark Welch, Ph.D., AgriLife Extension grain marketing economist in the Texas A&M Department of Agricultural Economics, Bryan-College Station, said corn acres were expected to be down, but higher yields are expected thanks to improved soil moisture levels.
Welch said Texas corn acres were expected to drop 16% from 2.5 million acres in 2023 to 2.1 million acres, according to the March Prospective Plantings report from the U.S. Department of Agriculture. Corn acres in the U.S. were expected to drop 5% to 90 million acres this season. The final national acre total could swing one way or the other by up to 1 million acres, he said.
The acreage drop should not be a shock, Welch said. Prices are lower than they were last year, and the 10-year average for Texas is about 2.4 million corn acres.
Much of the corn fields in the southern half of Texas have been planted and most of those fields have emerged. Growers planning to put in corn in the High Plains and Panhandle regions were expected to begin planting soon and sowing will follow throughout the U.S. Corn Belt.
Welch said producers could still decide to go with other crops like sorghum, cotton or soybeans based on input cost considerations, production expectations and expected prices in their local markets. He noted that acres in Texas harvested for hay and other forages were up by more than 1 million acres since 2022. This could be a sign that producers may be trying to capture more value in forage crops due to higher beef cattle prices and drought limiting forage supplies.
“With any crop, it’s not just what you plant, it’s how many acres make it to harvest and how much grain you harvest,” he said. “There could be a reduction in planted acres in grains and still an increase in production due to a better harvested percentage and better crop conditions this season.”
Supply and demand weighing on corn prices
Conditions so far are shaping up for a good Texas corn crop, Welch said. Soil moisture levels have improved significantly in coastal and Central Texas, which have both seen shifts from cotton to grains, specifically corn, in recent years.
But better growing conditions don’t always translate to more profit potential, he said. Corn prices have dropped over the past year based on supply and demand factors.
Cropping conditions improved for Texas farmers, but soil moisture has also improved in the nation’s Corn Belt. Some areas of the major corn-producing region remain drier than normal, but soil moisture levels have improved significantly as planting nears. Better growing conditions suggest at least the potential for average to above average yields, Welch said.
National corn yields have improved each season by an average of 2 bushels per acre since 1950, Welch said. Better commercial fertilizers, better management practices, improved plant genetics that optimize yields along with traits like disease and pest resistance have all contributed to crop performance. Technologies used to plant seeds and harvest grain have also contributed to better yields.
Despite drought in Texas and swaths of the Midwest, Welch said corn producers averaged 177 bushels per acre, a record, in 2023. He suspects that trend to continue and would not be surprised if averages hit 181 bushels per acre this season.
As the potential for supplies remains high, demand for corn has remained static or increased only marginally, Welch said.
Demand for feed and fuel – 39% of the 2023 corn crop went to livestock feed while 37% went to ethanol production for gasoline – has not returned to pre-pandemic levels. That combined with larger than normal corn stocks have fueled the price declines, he said. Corn stocks surpassed 2 billion bushels compared to 1.3 billion at this time last year.
“That bigger supply increase has depressed prices,” Welch said. “That number is a significant shift year-to-year, and despite the expectation to plant fewer acres, we should expect to harvest a better percentage of them and there is potential for even better yields. Those projections mean we could see corn stocks pushed beyond 2 billion bushels.”
Texas corn facing bearish market
Corn prices were $4.65 per bushel late last week, Welch said. That is $2.50 below the per bushel price this time last year.
That decline is significant for producers. Profitability calculations are different for every operation, Welch said, but the breakeven price for corn has been in the $4.70-$5 range the last few years.
Texas producers do have an advantage in the various corn markets, Welch said. They are the first to plant and harvest. If their corn arrives at grain elevators in August before the Corn Belt harvest gets underway, producers can find better marketing opportunities.
But Welch said this is not the year for producers to wait for higher prices. He expects there may be 10-15 cent increases here and there throughout the season, and that if contracts are available, it may be worth locking in a price bump.
There are a few factors that could positively influence prices for Texas producers as the season progresses, Welch said. There may be some looming concerns about the corn crop in Brazil, which is experiencing levels of drought.
Poor yields from Brazil could improve export prospects for U.S. farmers. But demand from China, the world’s leading corn importer may be dampened by increased production in 2024, lower feed use due to low pork prices, and the nation is holding two-thirds of the world’s corn ending stocks in reserve.
Welch expects exports to Mexico – the No. 1 importer of U.S. corn – should remain strong, and that other global factors like the conflict between Iran and Israel and the Ukraine-Russia war could weigh on commodities across the board.
Whether Texas growers find better prices selling early harvested corn to localized buyers or can access export markets, Welch said they should seek any price advantage in this market.
“There are a lot of domestic and global factors that have contributed to the current market,” he said. “The speculative traders on corn and soybeans are the most bearish we’ve seen in 20 years of data. Right now, the recipe is not there for higher prices, so any chance our producers can get to lock into advantageous pricing, that could be a positive.”