INDIANA: In Tough Economy, Soybeans Are King
It’s well known that a U.S. consumer with a weak pocketbook will choose chicken over the more expensive beef steak. This year, U.S. farmers facing a fourth year of below-cost-of-production commodities prices appear to be choosing to plant soybeans over corn.
Is the financial squeeze on in agriculture? It appears that way. And it’s playing out in the planting intentions of U.S. farmers.
Total acres of all U.S. crops will drop from 319.244 million last year to 316.918 million, according to the recent USDA Prospective Planting Intentions Report.
The USDA pegged U.S. 2017 soybean acreage at an all-time record high of 89.5 million.
For the next week, Successful Farming at Agriculture.com will break down the major soybean-producing states’ corn and soybean acreage, highlighting the economic choice of farmers to grow the less cost-prohibitive crop. As of this week, the soybean-to-corn price ratio measures 2.46:1, favoring soybean production.
With the nearby CME Group’s corn price at $3.63, soybean prices would have to fall below $8.40 per bushel before soybeans and corn would have the same profitability, according to figures released this week from the University of Illinois.
Indiana will plant 350,000 more soybeans than a year ago. In fact, this will mark only the second time ever that the Hoosier state will plant more soybeans than corn. The first year that occurred was just a year ago.
In the March 31 USDA Report, Indiana’s soybean acreage was estimated at 6.0 million compared with 5.65 million a year ago and 5.55 million acres in 2015.
For corn, Indiana farmers are expected to plant 5.6 million acres, equal to a year ago.
Kif Hurlbut, USDA NASS deputy regional director for the Great Lakes Region, says the extra soybean acres were expected due to the current economics.
“Yes, this is a response to the financial squeeze in farming,” Hurlbut says. There is business appeal with one crop over the other (corn). For Indiana farmers, anyway, soybeans are more profitable.”
Hurlbut adds, “We’ll probably see these acreage numbers shore up a little more in the June USDA Acreage Report.”
Aside from the economics, the next question is where the Indiana farmers are finding the extra acres for soybeans. With the state’s corn acreage remaining the same as last year, and the soybean acres increasing 6% over a year ago, Hurlbut says other crops are being replaced.
“It appears that marginal ground is being used to add some of these extra soybean acres. Plus, less hay and less winter wheat acres will be switched to soybeans,” Hurlbut says.
Spring Planting Update
In southwest Indiana, some areas are ready for the corn planting season, he says.
Though wet conditions prevail throughout much of the state, a switch from corn to even more soybean acres is not expected, Hurlbut says.
“Wet springs are becoming a broken record. With the farmers’ ability to plant a lot of crops in a short time, these wet springs don’t account for much of an acreage shift anymore,” Hurlbut says.