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Soybeans May Lose Less Land to Corn Than Expected
The U.S. is awash in soybeans, the result of the trade war with China — which has crimped exports — and a string of bumper crops that are clogging storage bins. Although farmers were expected to respond by planting more corn this year while cutting back sharply on soybeans, there is skepticism that a large rush to corn will actually occur.
Soybeans may be nearly as profitable as corn in the Midwest this year, said economist Gary Schnitkey of the University of Illinois after comparing likely expenses and revenue from the two crops. “Projected returns call into question assumptions of large switches of acres from soybeans to corn,” wrote Schnitkey at the farmdoc Daily blog.
Traders expect soybean plantings of 86.1 million acres this spring, down by 3.5% from 2018, according to surveys released by Reuters and Bloomberg on Wednesday. Based on conditions last fall, the USDA has projected a plunge of 7.5% in soybean plantings, while corn plantings would grow by a bit more than 3%, to 92 million acres. The USDA’s annual Outlook Forum, which opens today, is traditionally a time when its analysts update their figures.
A year ago, soybeans were expected to become a perennial challenger to corn as the most widely planted crop nationwide, due to strong global demand for the oilseed, especially in China. Soy plantings nearly equaled corn plantings in 2017 and nosed ahead last year — 89.2 million acres of soybeans vs. 89.1 million acres of corn. With the soybean stockpile forecast to swell to a record 910 million bushels by the time this year’s crop is ready for harvest, the common belief has been that corn would be more profitable this year, while the prospects for soybeans hinge on trade negotiations.
Based on his figures, Schnitkey said corn would generate more revenue in some instances but not enough to suggest a large shift to corn. “Most farms in central Illinois have a corn-soybean rotation, necessitating a move to corn after corn to grow more corn,” he said. But planting corn two years in a row is usually accompanied by somewhat lower yields, as well as less revenue per acre than soybeans. “These lower corn-after-corn returns suggest maintaining a corn-soybean rotation.”
Schnitkey said that if “central Illinois budgets do not suggest a switch to corn, budgets in less productive areas likely will not suggest a shift from soybeans to corn.”
In the wire service surveys, traders said they expect smaller wheat sowings than the USDA does. Their estimate for corn plantings, 91.5 million acres, was similar to the USDA projection. The National Cotton Council said its survey of growers in early winter found that more land would go into cotton this year than last, at the expense of soybeans.
If farmers plant as much land to soybeans as traders expect, it would mean a crop of about 4.3 billion bushels — the third or fourth largest on record. With a huge crop, soybean stocks would be stuck at near-record levels when the 2020 crop came onto the market.