Episode 94 - June Acreage Report Offers No Surprises

Rice acreage in Arkansas just hit a 50-year low, so what's driving farmers away from a crop they've grown for generations? Hunter Biram and Scott Stiles break down the 2026 USDA June Acreage Report, exploring why rice and peanut acres fell while cotton surged past expectations. They dig into soaring input costs, a wave of acres shifting to soybeans, and whether this marks a lasting structural shift for Arkansas rice. 

Transcript

Dr. Hunter Biram 0:00

The USDA June acreage report estimates for corn and soybeans were largely in line with expectations. Southern agriculture experienced substantial acreage declines in the rice in peanuts, and cotton acreage increased beyond expectations due to stronger price signals. That and so much more on this episode of Morning Coffee and Ag Markets. Well, with me today to talk about the 2026 USDA June Acreage Report is Mr. Dr. Professor Scott Stiles. Scott, great to have you, man.

Scott Stiles 0:39

Great to be on. Good to talk to you again.

Dr. Hunter Biram 0:41

Yeah, Scott. So, I mean, you know, we're gonna talk about Acreage Report today, a big report. This is July the 1st, by the way. For those listening, this is we're we're we we are recording this the day after, almost 24 hours after the report came out. And we're hoping to get this out on Monday, uh, but we it may be a little bit later, but it'll be next week sometime. So just to throw that out there, this is July the 1st. But I'm gonna provide our listeners with some background. And then Scott, I'm gonna have you jump in. So on June 30th, USDA released its annual acreage report, providing the first official look at producer planting decisions after spring planting concluded. Overall, the report offered few surprises nationally, but several important developments emerged for Southern Ag. Nationally, corn acreage was estimated at about 95.3 million acres, soybean acreage at 85.4 million acres, cotton acreage at 9.85 million acres, rice acreage at 2.02 million acres, and as we'll talk about, Scott, that's the lowest since 1972. The most notable finding for Southern agriculture was the magnitude of acreage declines in long-grain rice and peanuts. Compared to March intentions, long-grained rice acreage fell by roughly 16%, while peanut acreage also declined substantially. Cotton acreage increased beyond expectations, likely reflecting stronger future prices during planting season. USDA will incorporate these acreage estimates into the July Wazley report, where the largest revisions are expected to be in the rice balance sheet. So without further ado, Scott, when you first saw the June acreage report, what stood out to you most both nationally and for Southern Ag?

Scott Stiles 2:02

I don't know about you, Hunter, but I I could not wait to see the rice acreage number. That was my number one priority. I think I flipped to that page first. Same here. I could not wait to see what NAS came up with for that. And I guess it came in right along industry expectations, I guess. I mean we knew it would would be historically low. I think a lot of people said ahead of the report it would dip down to numbers that we hadn't seen since the late 70s. And that's exactly where where we landed. So but anyway, it it was a you know, it's a historically low number, as you mentioned. We're down to 851,000 total acres here in Arkansas. It is lowest since 77. And as you mentioned a bit earlier, the total acres in the U.S. at a little over two million, you know, it's two million seventeen thousand. That's the the lowest since seventy-two. So historically low numbers for Arkansas and the U.S. and and some other states as well.

Dr. Hunter Biram 3:00

So yeah, so then what about nationally? So I mean, rising cotton, obviously, we care the most about that probably here in the South, but what about nationally, more from a corn and bean perspective?

Scott Stiles 3:09

Yeah, no surprises really there. The national corn number came in at 95.3 million, as basically the same as the March intentions. It was a little higher than the average guess, I think 350,000 acres above the average trade guess, but really no surprise. You know, it fell well within the range of of estimates for corn. So nothing shocking there. And you know, and then past years, a lot of times we can see a you know, a lot of market volatility on report day, but it's a pretty quiet day. I mean, I think you mentioned that yesterday that you know markets really didn't react to the report. So corn, you know, finished today six higher. So I think it was, you know, it wasn't any big moves there.

Dr. Hunter Biram 3:51

No, and I mean, so I went to all the markets. I mean, obviously we got to go to ice for cotton, but then I'd go to CME for rice, corn, and soybeans. And I mean, yeah, if if if you're looking at a chart of rice of rough rice futures, it could be September or November contract. I mean, yeah, you saw a pretty big dip there from but from a percentage standpoint, it really wasn't that big of a percentage drop. Maybe my idea of a big drop is is is not accurate. Scott, like when you were looking at that chart, did that seem like a big drop or did you expect it to be, you know, even an increase, right? Because we saw the acreage come in lower. What might have been driving that drop in the futures price?

Scott Stiles 4:30

Well, you know, the riots market had moved the the September contract, it closed higher nine consecutive sessions leading up to the June 30th. So it already moved from $12.20 up to $13.80. It had moved, you know, $1.60, you know, in the nine sessions ahead of the report. So it did, it had made a big move and and a lot of the you know, the acreage reduction was uh, I think, in the price. But, you know, you also had to remember that there were other reports that were released at the same time. We got the acreage and we also got the rice stocks number. So, you know, the rice stocks number was bearish. It's historically heavy rice stocks, you know, still sitting out in, you know, in grain bins. So we saw that number as well. And that could have also been a factor in in why the futures turn lower. I think the setpo is 42 cents lower. You know, and it may not necessarily be due to the acreage. It could have been, you know, partly due to the stocks numbers.

Dr. Hunter Biram 5:27

Yeah, you know, it's almost like we have enough rice on hand that even this acreage reduction isn't going to change the balance sheet by that much.

Scott Stiles 5:36

Right, right. We got a big supply to work through, you know, the beginning stocks for this market for the new crop marketing year, they're, you know, at 40-year highs. So, you know, highs since the mid 80s. So it's it's a big stockpile to work through, you know, going into this crop year.

Dr. Hunter Biram 5:52

So, you know, Scott, as as you mentioned, national rice acreage has fallen to the lowest level since 1972. So, what factors drove farmers to reduce their acreage this year in your in your thoughts? Like what have you heard?

Scott Stiles 6:07

Well, you know, I think that there was a loss projected, you know, for rice from the outset. And um, I look back at, you know, Brianna does our budget work and in the first, you know, in the initial set of budgets that she ran, you know, the variable cost on a hybrid rice was $977 an acre. So it's, you know, it's obviously, I mean, it always is. I mean, it's our highest input crop, but the $977, that was actually a little, you know, increase from last year. So, you know, the cost hadn't adjusted lower. And then just kind of as a as a default yield, you know, she plugs in, you know, $190 bushel projected yield. And, you know, I looked at new crop bids and on average during January and February were $490 a bushel. So we really hadn't seen any appreciation in rice prices, you know, in the in the first couple months of the year. And um, so if you plug in, you know, if you're working with 190 bushel yield at $490 a bushel, uh, the projected loss was $232 an acre on uh, you know, 20% share rent scenario. So, you know, even before we got into this, you know, into the RAN conflict, there was a, you know, the projected loss for rice. And I think that was certainly a factor. I think growers were running the numbers themselves and seeing, you know, this doesn't pencil out. And um that, you know, likely had the had the largest influence on sharp drop in acres we saw.

Dr. Hunter Biram 7:35

Yeah, I mean, when we, you know, think about relative prices, you know, the price of rice even relative to beans and uh relative returns, so to speak, when you look at, you know, if you're on the 80-20, that's great. If you're on a 190 bushel, that's great. You know, but I think the state average might be closer to, is it 167, maybe, maybe closer to 170. So I mean, you know, closer to the state average, significantly lower than uh what expectation would give you. And then we don't even account for discounts, like you know, quality discounts once that grain goes to the elevator. And we've you know had quality issues for the past few years. And so that plays into it. But you know, we've heard that some farmers have had success in renegotiating rents to 80-20, but still quite a bit of 7525 out there, at least from what I've heard. So, you know, but if even with all this, I mean you're you're kind of painting one of the best case scenarios of you know, you're losing $200 an acre, and uh that's pretty bad when that's a pretty optimistic scenario for rice. Whereas you've got beans on the other side, again, talking about relative net the relative net returns, relative prices, beans, stronger prices, lower expenses for the most part. Um, I think we're looking at pretty much a break-even scenario for four beans. And if farmers were able to book and have and take advantage of some good pricing opportunities leading up to the report, I mean, people growing beans could be making money, which, you know, for me to even say that is like, wow, I can't believe that we're even thinking about making money right now, um, even apart from you know, FSA or RMA or anything like that. I mean, just straight up booking and producing and doing the best that you can on a 55 bushel an acre state average. You know, if you if if if if you can do that, if you can do 60 even, you're you probably are making money. So we saw a big shift, and you know, this can transition us if you want to talk about that too, Scott, from pretty much almost all the rice acres seem to go into into soybeans. Is that a fair assessment?

Scott Stiles 9:21

I think so, because our our bean or let's say from last year, what our rice acres were down four hundred and thirty-three thousand, and then soybeans are up a little over six hundred thousand. I think soybeans were up six hundred and ten, and then rice, you know, the net change would be about may end up being about four hundred and fifty thousand. So yeah. So yeah, you know, soybeans, you know, picked up north of six hundred, six hundred thousand acres, and that came from rice and some from peanuts and yeah, some from cotton too.

Dr. Hunter Biram 9:51

I saw that Arkansas actually had the lowest drop in cotton acreage of any state when you were looking at that state by state analysis. I think it might have been 10% maybe.

Scott Stiles 9:59

It was yeah, that's right. It's fifty thousand acres from from last year. So it was about ten percent.

Dr. Hunter Biram 10:05

You know, our friend over at Auburn, Adam Rabinowitz, he wrote up the uh Southern Act Today article that that featured this, and it ran today on July first. And um his analysis highlighted that long-grained rice acreage came in well below March intentions. And so this question kind of highlights or goes back to what we kind of started with here. And do you think that producers were making acreage adjustments later in the season, mostly driven by the Iran conflict, and maybe that's why they came in so much lower, or do you think that maybe the, you know, maybe the initial number wasn't that great to begin with?

Scott Stiles 10:36

Well, you know, you know, I I do think the Iran conflict played a role there. You know, we revised the budgets in in March, and we still hadn't captured really the the top of the urea market, but you know, we we reissued the the the crop budgets in March and and um that added, you know, by that time another $77 acre in variable cost just from the fuel and fertilizer increases, speaking to rice. So when you add, you know, another 70, 77 to, you know, just rounded off 80 bucks an acre of variable cost, that in turn, you know, increased their break-evens at, you know, more, maybe another, you know, 45 to 50 cents a bushel. So I do think that, you know, played a role. I mean, it just just think about it. Yeah, I mean, ahead of March 1st, you know, urea prices were, you know, for us were a little bit below six hundred dollars, I think kind of in the 590s. And um, gosh, I mean, by the by mid-April, we were s you know, some of the quotes we were getting were around $900 a ton, you know. So essentially UREA had gone up 50%, you know, from the first of March to mid-April. Diesel had gone, you know, essentially doubled, you know, it was kind of in the 240, 250 area, and it pushed toward, you know, five, five dollars the futures. So, you know, so I think all of that, you know, taken in total, probably, you know, gosh, people thought, okay, well, I just I'm I've taken a bad situation of and it and it's gotten worse. If you hadn't, you know, if you hadn't booked your diesel and and uh and urea ahead of time, if you were exposed, you know, to that extent and inputs. I do think that it that played a, you know, played a role in in uh plant decisions.

Dr. Hunter Biram 12:20

Yeah, you know, when we look at historical planted acreage, at least in Arkansas, you know, just going back to this rice acres, the at least the long-grain rice acres and the lowest since 1977. Just looking at the data from NAS, state level acres reported, which in this data set I've got starts in 1972. That's when the data starts. That actually in 1977 was 692,000 acres. And that was more than double what the acres were in 1972. So the point I'm trying to make here is that in 77 in Arkansas, the acreage was actually increasing. It was at a rate of increase. I mean, the acres had doubled in five years, pretty big increase, but in in the span of five years. But what we're experiencing now is actually a decline. So we're talking about a time period that it wasn't marked by, you know, negative net returns and people didn't want to plant as much. People were planting a lot more than starting to plant more rice then. And now there's a drop in that acreage, which I found to be pretty interesting. Do you think this is indicative of everyone always asks this? And and you don't have to answer this, but like, you know, there's always the structural versus cyclical change. You know, is do you think this big drop in acreage and as low as as we've gotten it to now, is this more structural or cyclical?

Scott Stiles 13:43

You know, we certainly need to see, you know, a rapid recovery in prices, or it will be, you know, a structural change because it's it's you know, we talk about, you know, what are the parallels to this and the in the ginning, you know, the cotton ginning industry's gone through the same thing. You know, when I started my extension career, we had 130 gins in the state. Today we have twenty-four. Oh wow. You know, or you know, it's in that neighborhood, twenty twenty-five. And uh and it's because, you know, we plant half as many cotton acres in the state. So the same, you know, this the cotton industry's gone through this, but it, you know, it had to change. It it got from fewer to larger to newer, you know, fewer, newer and larger. That was that was the answer. And um, you know, you achieved the scale economies that just threw larger plants, fewer, more modern technology. And that's, you know, that's that's the answer to the, you know, that the cotton industry found. Is rice, you know, going through that? Well, you know, if acres stay down at this level, yeah, there'll have to be some, you know, some some changes similar to what the cotton industry's gone through.

Dr. Hunter Biram 14:52

Yeah, and I mean we're and we're seeing it right before our very eyes. I mean, Riclin closing nine dryers, I mean, it's been all over the news. The Democratic Gazette, Channel Seven uh has done a lot of coverage on it. I think I've heard the producers, at least there's talk to them closing two dryers. So, I mean, you know, over ten dryers across two of the largest, if not the largest, cooperatives in the state, you know, is a signal of uh of of what's happening. To kind of remain in this space a little bit, the last thing that I want to ask you about, Scott, is cotton acreage. So, you know, yes, in Arkansas it it declined, but across the nation, cotton acres actually increased beyond expectations. So what do you think drove that increase?

Scott Stiles 15:30

Yep. We did, you know, I guess the two there were two states that really showed a big increase from the March intentions, and that was Georgia and Mississippi. They would account, you know, for the change in in the March intentions. And I think, you know, I guess the short answer to that is the, you know, the the price increase that we saw when first of March uh the December futures um closed at $68.92. And uh by mid-May, you know, as we're you know, getting the crop planted, you know, the high on December futures uh got up to 88.08. So we you know it's pretty, you know, pretty sizable run, about 25% increase in prices, you know, from the first of March to mid-May. And then 88 cents was, you know, that was a really attractive price that we hadn't seen in a while. We hadn't seen 88 cent December futures since October of 2023. Oh wow. Yeah. So it had been had been a while. So the you know, the price, you know, December futures running up, you know, to that to those levels, I think, probably had the most most impact. But you know, I always tell people, I mean, you know, the decision to grow cotton's always a local one. Related to uh, you know, your land rent structure, uh gin rebates that, you know, and if your the is your local gin paying, you know, seed rebates back. Some of those things, you know, also factor factor into the decision as well. But anyway, the the bigger factor was, you know, the run above 80 cents and in December cotton.

Dr. Hunter Biram 17:08

Yeah. Yeah.

Scott Stiles 17:09

Um, you know, and growers took advantage of that sum. USDA publishes uh an estimate of what percent of the crop's been forward contracted. And the last numbers they released were as of May 31st, and they said twenty twenty percent of the the Arkansas crop had been forward contracted. And that's, you know, it doesn't sound like a lot, but that's that's higher than I guess that that's the highest percentage since 2022. And that was I think the second highest percentage in the country. So it was, you know, relative to other states it was high. So I uh growers did, you know, did get some pricing done uh during that run-up. That's good to hear.

Dr. Hunter Biram 17:50

Now, is that gonna be just for cotton or is that for all crops in Arkansas?

Scott Stiles 17:53

That was just cotton for a while. Okay.

Dr. Hunter Biram 17:56

Good to hear. You know, it's so important to leverage some good prices. And uh, you know, it's hard to say when we're at the best price, but you know, a good price is one that'll get you as close to breaking even or making some money as possible, especially in a time like this. You know, so over 80 cents, absolutely, whenever we've been seeing what, you know, 60, 65 cents. I mean anything over 85 cents, that's that's amazing. It's like it's it's like with soybeans when you can get well above twelve dollars. Whatever we've been kind of in that 1050 space for a while, $11. So I mean, that's these are kind of the targets to be thinking about. So anyway, well, Scott, I'm not gonna keep you any longer. As always, I appreciate your time, appreciate your insights. I always mean it when I say Mr. Doctor Professor, because you have taught me a lot. I know that you've taught a lot of people that listen, have listened, and people who come to your presentations, and so just really value your insight.

Scott Stiles 18:47

Well, thank you. I always enjoy these discussions with you.

Dr. Hunter Biram 18:49

Yeah, man. All right. Well, thanks for being on, and uh y'all stay tuned for the market report. Thank you.

Evan Ware 18:54

Back with your market report as of July 2nd, 2026. Corn September futures are four dollars and twenty-three cents per bushel. That's down six percent from a month ago, but up one percent from a year ago. Corn December futures are four dollars and forty-two cents per bushel. That's down five percent from a month ago and up two percent from a year ago. Rice September futures are thirteen dollars and twenty-seven cents per hundred weight. That's up two percent from a month ago and up two percent from a year ago. Rice November futures are thirteen dollars and sixty-two cents per hundred weight. That's up two percent from a month ago and up three percent from a year ago. Soybean's November futures are eleven dollars and forty-eight cents per bushel. That's down three percent from a month ago, but up ten percent from a year ago. Soybean's March 27 futures are eleven dollars and sixty-two cents per bushel. That's down two percent from a month ago, but up nine percent from a year ago. Cotton December futures are 77.12 cents per pound. That's down four percent from a month ago, but up 12% from a year ago. Cotton March 27 futures are 78.52 cents per pound. That's down 4% from a month ago, but up 12% from a year ago. Wheat July 27 futures are $6.39 per bushel. That's up 6% from a month ago and up 15% from a year ago. The US weekly average for peanuts is currently $476 per ton. That's up 6% from a month ago and down 8% from a year ago. Moving on to our fertilizer prices, urea is currently about $590 per ton. A month ago, it was $710 per ton. Three months ago, $828 per ton. And a year ago, $580 per ton. Ammonium nitrate is currently $533 per ton. A month ago, it was $575 per ton. Three months ago it was $590 per ton. And a year ago, it was $467 per ton. Ammonium sulfate is currently $522 per ton. A month ago it was $512 per ton. Three months ago it was $528 per ton. And a year ago it was $555 per ton. DAP is currently about $899 per ton. A month ago it was $894 per ton. Three months ago was $835 per ton. And a year ago was $838 per ton. Triple superphosphate is currently $807 per ton. A month ago it was $803 per ton. Three months ago was $733 per ton. And a year ago was six hundred and eighty-eight dollars per ton. Potash is currently four hundred and sixty-five dollars per ton. A month ago it was four hundred and fifty-seven dollars per ton. Three months ago it was four hundred and fifty dollars per ton. And a year ago is four hundred and fifty-seven dollars per ton. Onto our fuel prices. Arkansas Highway diesel is currently four dollars and thirty-five cents per gallon. A month ago it was four dollars and ninety-six cents per gallon. And a year ago, it was three dollars and thirty-six cents per gallon. Arkansas farm diesel is currently three dollars and thirty-eight cents per gallon. A month ago it was three dollars and ninety cents per gallon, and a year ago it was two dollars and sixty-one cents per gallon. The Mississippi River at Memphis, current reading, is 19.31 feet. A year ago it was twelve point six two feet. We hope that you have a great week. Thanks for tuning in to another episode of Morning Coffee and Ag Markets.

Dr. Hunter Biram 22:05

If you would like to learn more about the Fryar Price Risk Management Center of Excellence, we encourage you to go to Fryar F-R-Y-A-R dash Risk, R-I-S-K dash Center dot u a da dot edu. If you want to check out the newsletter that is associated with this podcast, we encourage you to visit the website and check out podcast newsletters. When you go to podcast newsletters, you should be able to see the most recent newsletters that we published. And within each one of those newsletters, you should be able to click on a link to subscribe if you haven't subscribed already. Thank you for tuning in and we'll catch you next time. Bye bye now.