Rising Commodity Prices Shift Conservation Lands to Crop Fields

Last Week’s Moves 

Corn 772-0  (-3.92%)  |  Soybeans 1585-2 (-3.65%)  |  SRW Wheat 1092-6 (+3.52%)

KC Wheat 1164-2 (+6.03%)  |  Live Cattle 133.500 (-1.22%)  |  Lean Hogs 101.300 (-3.50%)
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Welcome to your weekly agriculture report, where we cover everything you’ll need to know for the week ahead. This week, landowners shift conservation land to crop fields, water scarcity is predicted to worsen and California deals with the impacts of a megadrought. 

Landowners Shift Conservation Land to Crop Fields

Landowners told the USDA they will take 1.7 million acres out of the long-term Conservation Reserve and put it back into crop production, betting on profits from sky-high commodity prices.  Under the Conservation Reserve, landowners are paid an annual rent if they agree to idle environmentally sensitive land for at least 10 years.  

• Contributing to climate change cure…Through the Conservation Reserve, producers and landowners establish long-term, resource-conserving plant species, such as approved grasses or trees, to control soil erosion, improve soil health and water quality, and enhance wildlife habitat on agricultural land.  The lands enrolled in CRP contribute to climate change mitigation efforts across the country.  
   
• Conservation Complications…The shift toward crop production complicates the Biden administration’s goal of relying on conservation lands.  The USDA had aimed to expand the Conservation Reserve to this year’s cap of 25.5 million acres from its current 22.1 million acres.  Offers for new land under General CRP were considerably lower compared to last year’s numbers, with fewer than 400,000 acres being offered this year versus over 700,000 acres offered last year.

Water Scarcity Predicted to Worsen in Over 80% of Croplands

According to a new study, agricultural water shortage is anticipated to worsen across more than 80% of the world's largest farmlands by 2050.  The new report analyses present and future water needs for agricultural production and estimates whether existing water levels, whether from rainwater or irrigation, will be enough to satisfy those demands.

• Daunting demand…Over the past century, the demand for water worldwide has grown twice as fast as the human population, leading to water scarcity.  A lack of water makes it difficult for producers to to irrigate their crops and, as a result, there are major threats to food security on every continent.
   
• What can we dew?... Flooding has a water-use efficiency of less than 40 percent, underscoring how ineffective the practice is in relation to water consumption.  Farming techniques that keep rainwater in agricultural soils could help mitigate shortages in arid regions.

Demand for water in parts of drought-stricken California is outpacing supply.  Scientists reported earlier this year that the West's current megadrought is the worst in at least 1,200 years and that the human-caused climate crisis has made it 72% worse.  According to the US Drought Monitor, California's two major reservoirs are at "critically low levels" at the point of the year when they should be the highest.

• Metropolitan mandate…In light of the foreseen shortage, Metropolitan, for the first time in its nearly 100-year history, is mandating that restrictions be put in place for parts of Los Angeles, San Bernardino, and Ventura counties that receive water through the State Water Project.
   
• Breaking the bank... A study from the University of California at Merced found that last year the drought cost the California agriculture industry more than $1.1 billion and 14,000 jobs.  This year, The California Farm Water Coalition estimates the drought will cause more than $3 billion in negative economic impact.

What else you need to know… 

• Surge in soybeans…China's soybean imports in April climbed from a month ago, due to the arrival of cargo delayed by poor weather and slow harvests in South America
• Fowl play…The bird flu virus that’s rapidly spreading across the U.S. is becoming the country’s worst outbreak, having already killed over 37 million chickens and turkeys, with more deaths expected through next month as farmers perform mass culls.
• Too cold for comfort…Last week was the eighth coldest and third wettest first week of May in more than 30 years for the corn belt.  As of May 1, corn planting remains well behind last year and the five-year average according to the United States Department of Agriculture.

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.