The 2017 crop year produced higher yields than many had forecasted, with USDA forecasting that it will be the second largest corn crop in history. Economists are expecting even more acres will switch from wheat production to corn and soybean production. Media sources regularly report increasing competition for export markets from crop production in other countries.

Economists are projecting that U.S. corn inventories (ending stocks) will be up 6 percent from last year, which puts downward pressure on corn prices. USDA projects the U.S. soybean inventory will be up 48 percent from the previous marketing year. Price supports for soybeans are similar to corn, with domestic feed use, exports and biofuel production creating demand for soybeans.

With a history of greater crop yields annually and large estimated ending stocks of corn and soybeans, the stage is set for raising the cap on allowable acres in set-aside programs. If 2018 crop yields are equal to or exceed 2017 yields and no new markets are found for surplus corn inventory, idling 15 million acres of corn production, in addition to the current CRP cap, would be needed to reduce the 2.4 billion bushel corn estimated annual surplus.

Increasing acres in agriculture set-aside programs will benefit many wildlife species of concern and potentially defer proposed listing decisions for monarch butterflies and other species. In addition, the agricultural sector will benefit from a better balance between supply and demand, ensuring producers receive a price that covers production costs.

However, there is opposition to proposed increases in caps for set-aside programs. Some argue that crop insurance programs provide a better safety net for producer’s income should prices fall. Yet, this does not address the imbalance between supply and demand for crop outputs. Farm bill discussions will focus on establishing policy that addresses over-production in a way that benefits farmers and habitat conservation.