USDA's Baseline Projections to 2028: Corn Acreage Below 2007/08; Higher Production
By S. Patricia Batres-Marquez
Decision Innovation Solutions
Early-released tables for the Agricultural Projections to 2028 were published by USDA November 2, 2018. USDA’s long-term agricultural projections contain a long-run conditional scenario for the next decade based on defined assumptions about the macroeconomy, agricultural and trade policies, the weather, and international events. The Agricultural Act of 2014 (2014 Farm Bill) is assumed to be extended and remain valid through the projection period. The starting point for the projections to 2028 is from the October 11, 2018, World Agricultural Supply and Demand Estimates (WASDE) report. The early-released selected tables include the long-term projections for corn throughout the 2028/29 marketing year.
Corn Planted and Harvested Acres
Corn planted acres are forecast to increase from 89.1 million acres in 2018/19 to 93.0 million in 2020/21. This projected acreage is expected to continue for the following three years. Afterward, corn acreage is forecast to decline, and by the end of the decade corn planted acres are projected at 91.5 million (see Figure 1). According to the baseline projections, throughout the projected period, corn planted acres are expected below the corn acreage level during the 2007/08 marketing year (93.5 million acres). Baseline projections assume 92 percent of planted acres, on average, will be harvested throughout the projected period. Harvested acres start at 81.8 million acres in 2018/19 and end at 84.1 million acres by 2028/29.
Figure 1. Corn Projected Planted and Harvested Acres
Projected Corn Production and Yield Increase
Despite projected lower planted corn acres by the end of the projected period, the baseline corn production projection is expected to increase steadily throughout the next decade (see Figure 2). Corn production would increase 11 percent, from 14.778 billion bushels in 2018/19 to 16.355 billion in 2028/29. Corn production is projected to increase with expected corn yield growth. At the beginning of the projected period, yield would drop from 180.7 bushels per harvested acre in 2018/19 to 176.5 bushels per acre in 2019/20. From that year on, corn yield would trend upward. Corn yield is forecast at 194.5 bushels per acre by 2028/29 (see Figure 2). Normal weather with trend crop production yields are generally assumed by USDA when formulating the long-term agricultural projections.
Figure 2.Corn Projected Production and Yield
Projected Corn Use for Ethanol
Projected corn use for ethanol production is shown in Figure 3. Corn use for ethanol is projected to grow during the first part of the projected period, from 5,600 million bushels in 2018/19 to 5,725 million in 2020/21 and 2021/22. Beginning in 2022/23, corn use for ethanol is projected to decline, and by 2025/26 corn use for ethanol is projected at 5,600 million bushels, the same level as in the 2018/19 marketing year. By the end of the projected period, corn for ethanol production is projected to drop to 5,450 million bushels and would account for about 33 percent of total corn use. Under this scenario, production of distillers grains, a co-product of ethanol production, would fall as well, while corn for feed could increase.
Note these baseline projections were based on similar assumptions as last year’s USDA’s long-term agricultural projections to 2027, namely, gasoline consumption is projected to decline during the next decade; the 10 percent “blend wall” is assumed to limit domestic production during projected period; infrastructure, geographical and other factors limit growth in E15 (15 percent ethanol blend) demand; and the E85 (85 percent ethanol blend) market will continue to be very small. Overall, when formulating these projections, USDA takes into consideration policies in place at that time, and the assumption is the policies will continue throughout the projected period. For example, the impending proposal of regulatory changes to allow gasoline blended with up to 15 percent ethanol during the summer months, which would be possible by using the same 1-psi Reid Vapor Pressure (RVP) waiver that applies to E10, was not considered in these projections, as this policy has yet to be defined and finalized. The notice of proposed rulemaking (NPRM) for E15 RVP waiver will begin in February 2019, with the final rule action in May 2019.
Figure 3. Corn Use for Ethanol Projection
Figure 4 shows projected corn demand for different uses or destinations, including corn for ethanol. Corn exports are expected to increase throughout the forecast period. By the end of the projection period, corn exports are projected at 2,750 million bushels, or 275 million more than the expected export volume in the 2018/19 marketing year (2,475 million bushels). Corn for food, seed, and industrial use, excluding ethanol, would grow less than 2 percent, from 1,480 million bushels in 2018/19 to 1,505 million in 2028/19. As Figure 4 indicates, corn for feed is the largest component on the corn demand side starting in 2022/23. However, this category includes a residual, which automatically increases when production is projected to grow, as is the case for corn in these projections.
Total corn use is projected to grow to a record volume of 16,380 million bushels by 2028/29. Corn prices are projected to increase during the first six years of the projection period, peaking at $4.10 per bushel in 2022/23. Prices would decline to $3.70 per bushel during the last three years of projections. Under this scenario, by the end of the projected decade corn prices would return to the 2014/15 level.
Figure 4. Corn Projected Usage and Price
Overall, the USDA’s long-term agricultural projections, which are determined under a set of assumptions, provide an initial point for analysis of alternative outcomes for the agricultural sector during the next 10 years. USDA will publish a complete report of the Agricultural Projections to 2028 in February 2019.
Batres-Marquez, S. Patricia. 2018. “USDA’s Baseline Projections to 2028: Corn Acreage Below 2007/08; Higher Production." Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. November 2018.