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Ag Census: Farmers Shift as Agronomics, Economics Favor Soybeans Over Corn, Wheat

Soybean acres have continued to grow at the expense of corn and wheat, a trend that’s likely to continue as agronomics and global economics point to increased planting of the oilseeds.

Harvested soybean acres in 2017 totaled 90.1 million, up from 76.1 million just five years earlier and only 63.9 million a decade prior, according to the 2017 Census of Agriculture.

Corn harvested area, meanwhile, fell to 84.7 million acres from 87.4 million five years earlier and was down from 86.2 million 10 years earlier, the USDA said in the report. All wheat acreage plunged 21% census to census to 38.8 million acres, the lowest since 1890, according to the government.

Improved economics stemming from improved agronomics are the reason soybean acres have grown considerably in the past decade, said Mike Zuzolo, the president of Global Commodity Analytics in Atchison, Kansas.

“Roundup Ready 2 took us up a notch, but Xtend beans have taken us to another level,” he said. “If we were using Roundup Ready 2 and averaged 52 bushels, that was a good year. Now in central Illinois and Nebraska and Kansas, we have producers pushing 80-bushel yields.”

North Dakota Soybean Acres Up 49%

Nowhere has seen a more pronounced shift in harvested acres than in North Dakota, traditionally a wheat-growing state where soybean area in 2017 jumped to 7.09 million acres from 4.73 million in 2012 and only 3.07 million a decade earlier.

Nancy Johnson, the executive director of the North Dakota Soybean Growers Association in Fargo, said the shift to beans in the state started in 1996. The Freedom to Farm Act and the advent of Roundup Ready soybeans led to the increase in acres that hasn’t stopped.

Those factors, along with increased international trade, have helped producers in areas where wheat and barley were almost exclusively grown become soybean acres, she said.

“If you look at what was happening in the world, we were starting to ship soybeans to China (in the late 1990s), and North Dakota was already invested in exporting our crops because wheat, corn, and sugar are nowhere near being consumed by the citizens of the state, so we had already developed that export mentality,” Johnson said.

It didn’t take much for farmers who’d grown wheat or barley to make the shift to soybeans, as a lot of equipment translated to oilseed output. Once they were able to grow soybeans, many producers looked at the economics and made the change.

Improvements in Infrastructure

Once more growers began planting oilseeds, the state infrastructure shifted. Rail companies put money into new tracks, the so-called ABCDs (which stands for ADM, Bunge, Cargill, and Louis Dreyfus) put millions of dollars into new grain facilities in the Pacific Northwest, and shipping to China became the norm for soybean growers in North Dakota, Johnson said.

“China’s population is huge, the middle class in China was exploding, demand for pork and poultry was exploding. So the path was there and we responded to the market signals,” she said. “China wanted our soybeans, so we built the infrastructure.”

Agronomists, analysts, and other market watchers don’t know the exact trajectory of land use in the future, but the demand outlook, at least this year, isn’t quite as rosy as it has been in the past couple of decades.

The ongoing trade war with China is of concern, as tariffs have severely cut into exports.

Since the start of the marketing year on September 1, export sales of soybeans are at 30.9 million metric tons, down 26% and the lowest in at least five years, according to the USDA. Corn sales, by contrast, are up 19% year over year.

Trade Disputes, Swine Fever Hurting Demand

Producers and others in the industry are hoping a trade deal is soon put in place that’s beneficial to the all agricultural producers, but it’s apparent China is especially important to soybean growers.

Swine fever that’s gripped China also is of concern as more than 1 million hogs have been affected in the Asian nation. Cargill said in its third-quarter earnings report that animal nutrition results were behind the previous year due partly to the outbreak.

“That’s the $64,000 question – especially with swine fever in place (along with the ongoing trade spat with China) – demand becomes a question,” Johnson said. “China has a bigger crop of hogs than the U.S. and all other countries put together. If they lose even a small percentage of hogs, then they have less demand for soybeans.”

It’s not just wheat acres that are on the decline.

Rice harvested acres in 2017 dropped 11% from 2012 to 2.4 million, the lowest level in more than at least 20 years, the census said. Sorghum acres declined 1.4% to 5.07 million.

Zuzolo said he doesn’t expect much will change between now and the next census in 2022 because aging farmers likely will continue on their current path. Larger farms and fewer producers, also seen in the ag industry and an indication of consolidation, could have an impact on which way acres shift going forward, he said.

Johnson said she also isn’t sure if the trend of more soybeans/fewer grains will hold in the next few years. It will all come down to demand.

“It’s very difficult to tell,” she said. “We’re prepared to deliver if the trade discussions end with something favorable for soybeans.”

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