Is “king corn” finally dead? For decades, corn has been the US’s most profitable crop, but after three straight years of low prices its dominance is being challenged and, this week, could officially end.



On 31 March, the US Department of Agriculture (USDA) will release its highly anticipated prospective plantings report, the government’s survey of US farmer spring-planting plans. It’s the first major forecast for the 2017 growing season, with the USDA releasing acreage intentions for all major row crops such as corn, soybeans, spring-planted wheat, cotton and other smaller grains.

In February, the USDA initially penciled in corn acres at 90m (36m hectares), down 4.3% from last year, and soybean acres at 88m, up 5.5% from a year ago. If realized, that would be record acreage for soybeans, surpassing 2016.

Todd Hubbs, assistant professor of agricultural commodity markets at the University of Illinois, emphasized the magnitude of the acreage swings between these two crops, saying changes this big had happened only a few times since the 1996 farm bill, when the USDA stopped telling farmers what to plant and let growers respond to market prices.

Since only 2m acres separate the two crops, any planting delays could possibly push soybean acres above corn by summer, when the USDA re-surveys producers. If that happens, it will be the first time since 1983 that corn has ceded the top slot.

Farmers are in a tight spot whatever they choose to plant. Following the strong prices set in 2012 and 2013, values have fallen, with corn down 57% and soybeans down 44% from their record highs. Farmers may prefer soybeans for a few reasons – prices on a relative basis are higher than corn, and upfront costs to plant beans are cheaper since growers don’t need to buy fertilizer.

Bill Nelson, senior economist for the agricultural consultancy Doane Advisory Services, said when farmers were being surveyed by the USDA, 2017 soybean crop futures prices were $1 a bushel higher than they had been in 2016. Corn futures prices for the 2017 harvest were only negligibly higher, and wheat prices were lower.

“Soybeans have a big premium there. The market is wanting protein in the form of oilseeds, which is a strong underlying factor. There are still returns to be made,” Nelson said.

That’s critical because farmers have lost money for three straight years. The USDA estimates net farm income this year will drop 8.7% compared with 2016 because of low crop prices and a fall in asset values. Most farmers have burned through money made during their salad days a few years ago.

Ken Morrison, editor of the agriculture newsletter Morrison on Markets, said farmers borrowing money for the growing season were likely to be worried about cashflow.

“There’s more of a cashflow concern than there has been the past two to three years simply because of the cumulative effect of net revenue being down on consecutive years,” he said.

Farmers won’t move to 100% soybeans because they still rotate between corn and soybeans annually, but swing acres could see more soybeans as farmers try to squeeze out margins, he said.

Another pressure is coming from agricultural lenders, which are becoming tight-fisted, too. Mike Zuzolo, president of Global Commodity Analytics and Consulting, said several clients expressed lending woes.

“The pressure by the lender is probably the greatest I’ve seen at least going back to … the farm bill of 1996,” he said, and he thinks that might mean acreage for both corn and soybeans is smaller than others think.

The Kansas City Federal Reserve’s agricultural credit survey from February echoed similar concerns about farmer profitability in its region.

Larger issues loom for farmers this year, no matter what crop they grow. The ethanol demand has plateaued and the future of biofuels policy in the US under the Trump administration may be questionable, especially if changes come to the Environmental Protection Agency. There’s concern over what might happen to international trade under Trump; US farmers rely heavily on the export market, especially soybeans, where they face competition from South America, and Brazil may harvest a record soy crop. Then there’s Mother Nature, who is never predictable.

Continual big harvests here and abroad and just steady demand are one reason crop prices have stayed low for so long – the world has plenty of corn, wheat, soybeans and even cotton. That isn’t likely to change, and that’s why this could be a make-or-break year for many farmers. Last year some over-leveraged corporate farms saw bankruptcies, Zuzolo said, and there is concern it could spread.

So far, no one thinks the US is on the brink of another 1980s farm crisis, but Morrison and Nelson said it was something the agricultural community was talking about.

“I think people will be a little more fearful if [prices stay low] much longer … [but there are] more people on the bubble than we had in the past few years,” Morrison said.