Selling Soybeans Across the Scale

This fall farmers will harvest a record sized soybean crop. USDA says about 4.7 billion bushels. They’ll need a home and farmers in North Dakota are really worried. About 2/3rds of their crop is shipped by rail to the Pacific Northwest for export to China. The Trump administration trade policies have mostly closed that market says North Dakota Senator Heidi Heitkamp, “What I would tell you is not only have you disrupted the markets and we have taken a haircut, you may not be able to sell them which is something I’ve been talking about for a long time.” Heitkamp was speaking to farmers in Fargo at the Big Iron farm show this week.

The cash price of soybeans has tumbled across the whole of the Midwest and some elevators are telling farmers not to bring their beans to town. Those soybeans from the Dakota’s and Minnesota are going to try and find another way out of the country. That’s probably through St. Louis and down the Mississippi River. It’s a brutal cash price situation that backs right up into Illinois says Todd Hubbs, “I hope some people put in at $10 to $10.30. Now it is just a lot of damage limitation and hopefully you get a good yield and you can market some of those soybeans right across the scale, but you are looking at really low prices.”

Hubbs, a commodity marketing specialist from the University of Illinois, thinks the only other option is for farmers to store soybeans on the farm and to hope for an end to the trade dispute with China or for a weather problem in Brazil, or both. Though he admits hope is not a strategy.

Market Mitigation Signup | an interview with Gary Schnitkey

Sign up for the trade and tariff compensation package from the United State Department of Agriculture is open. Todd Gleason has more on how and when farmers and landlords should fill out the paperwork.

Marketing Corn & Soybeans this Fall

The dramatic fall in the price of corn and soybeans earlier in the year has put farmers in a unique marketing position. They must decide how much of the drop is due to the expected bumper crop size of the harvest and how much comes from the Trump Administration trade policies. University of Illinois Agricultural Economist Todd Hubbs says determining when those disputes might be settled is key to making good marketing decisions.

A Commodity Markets Interview with Todd Hubbs

The commodity markets seemed to have found a bottom for the moment. Todd Gleason has more on what may be next with University of Illinois Agricultural Economist Todd Hubbs.

July WASDE to Reflect Tariffs

This Thursday’s USDA’s monthly supply and demand estimates will include the impact of the Trump Administration’s tariffs. Gary Crawford talks with the chair of the World Agricultural Outlook Board Seth Meyer about the July WASDE. The report is scheduled for release at 11 a.m. central time Thursday, July 12, 2018.

When Farmers Should Spray for Japanese Beetles

Japanese beetles are showing up in corn and soybean fields. These can do enough damage to cause yield losses, but it is fairly unlikely. The University of Illinois has published thresholds for when farmers should spray crops to protect them from the Japanese beetle.

Nick Seiter says there needs to be a lot of beetles and a whole lot damage done before a producer should spend money on a rescue treatment, “Most of the reports that I am getting, as you would expect and as is typical, are below the treatment thresholds. These are 25 percent defoliation after bloom and 35 percent before bloom for soybean and the threshold for silk clipping in corn is consistent clipping to half-an-inch or less regularly throughout the field. I had a question yesterday about what to do when you have both Japanese beetles and corn rootworm clipping silks in the field. The answer is the same, the clipping has to be down to half-an-inch or less consistently through the field while pollination is still ongoing.”

ILLINOIS Extension Entomologist Nick Seiter says farmers have no need to apply a rescue treatment for Japanese beetles until defoliation reaches at least 25 percent after bloom for soybean and silk clipping during pollination is down to half-an-inch or less for corn.

Market Outlook for Corn and Soybeans

Farmers, as we enter the last half of May, are nearing the end of the spring planting season and they are turning their attention again to the marketplace. Todd Gleason has more on how one agricultural economist sees prices playing out for the year.

We’ll start with the last numbers USDA publishes in the Supply and Demand tables for each commodity, the season’s average price. For corn, that number - at the midpoint - is $3.80. University of Illinois Agricultural Economist Todd Hubbs is a bit more optimistic. He has it at $4.05. His soybean price, however, is less than USDA’s. The agency has it at $10.00 a bushel. Hubbs puts it at $9.45. The difference in viewpoint says Hubbs lands squarely on soybean exports, “When we look forward to 18/19 the 2.29 billion bushel USDA projection seems a bit high especially when you consider the size of the Brazilian soybean crop and China’s aspiration to increase domestic soybean production while cutting back on imports for the first time in over a decade. It is unclear if China can pull this off, but I’ve got exports at 2.20 billion bushels in 18/19 and that may be generous considering whats going on currently in the market.”



So, Todd Hubbs soybean export figure is 90 million bushels lower than USDA’s for the coming marketing season. It’s lower for the current marketing year, too. All-in-all his soybean supply & demand table puts the new crop ending stocks at 562 million bushels. That’s a far cry from the much more optimistic USDA 415 million bushels projection and the reason his price projection is 55 cents a bushel lower than USDA’s. Again USDA is $10.00, Hubbs is at $9.45. His corn number swings in the opposite direction.

USDA, in the May reports, projected the price of new crop corn at $3.80. Hubbs is at $4.05. The reason why is pretty simple. Hubbs says he uses a lower yield trend line yield, "The main difference between my projections and USDA is the trend yield number. We sit at 171.4 whereas USDA has it a 174 bushels to the acre and the final yield makes a big difference in the consumption pattern and the final price.



Again, USDA is at 174 bushels to the acre and Todd Hubbs is using 171.4. Both numbers are calculated from the same USDA yield data set. USDA uses a smaller subset starting at about the time Bt corn was introduced. Hubbs’ set goes back a couple more decades, and consequently, his yield number is lower. The resulting price difference in the supply & demand tables for new crop corn is $3.80 for USDA and $4.05 for Hubbs.

May 10 | USDA WASDE ReAct with Todd Hubbs

The monthly WASDE report for May 2018 introduced the first look at the new crop corn and soybean supply & demand tables. Todd Gleason has more with University of Illinois commodity markets specialist Todd Hubbs.

Accident at Argentine Grain Terminal Sends Soybean Prices Higher

The price of soybeans and bean meal jumped Friday as news continues to filter in from the April 24 grain terminal port accident in Argentina. The Chinese flagged Ocean Treasure, a bulk agricultural commodities carrier, struck and heavily damaged a pier at Puerto General San Martín north of Rosario on the Paraná River.



Ocean Treasure was preparing to load up to 24,000 tons of corn and a total of 27,000 tons of soymeal, according to shipping agency data.

The incident occurred at the north dock of Terminal 6. It is grain and liquid bulk facility on the Paraná River. Video of the incident shows the collapse of a fixed conveyor belt and loading equipment after impact. Guillermo Wade, the manager of Argentina’s Chamber of Port and Maritime Activity, told Reuters that one worker suffered minor injuries. He reported that T6’s north dock sustained serious damage, but the south dock remains operational.

Bunge Grain Terminal Puerto General San Martín

Terminal 6 S.A., a joint venture of AGD and Bunge, loads out over 10 million tons of grains, protein meal, vegetable oil and biodiesel per year.

It is unclear how long repairs will take, but estimates range up to a full year.

Will Soybean Ending Stocks Get Larger

by Todd Hubbs, Agricultural Economist - University of Illinois
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Recent rumblings of potential tariffs by China on U.S. soybeans created a stir last week. While the market reacts to the uncertainty associated with trade policy, the upcoming WASDE report, on April 10, will update soybean use projections for this marketing year. The USDA may revise the forecast of ending stocks for soybeans during the current marketing year due to weaker than projected soybean export pace and stronger crush numbers.

The current USDA projection for soybean ending stocks during the 2017–18 marketing year sits at 555 million bushels, an increase of 130 million bushels since the November projection. The steady increase in ending stock projections is due to decreasing export projections. Current USDA soybean export projections for this marketing year are 2.065 billion bushels. On April 5, the Census Bureau released export estimates for February. The updated export estimates for soybeans brings totals for the first half of the marketing year to 1.433 billion bushels. Typically, soybean exports decline in the second half of the marketing year as South American production hits world markets. Due to this factor, the majority of soybeans tend to be exported in the first half of the marketing year.

Over the last decade, soybean exports during the first half of the marketing year averaged 76 percent of the final marketing year total. At the average pace, 2017–18 marketing year exports will come in at 1.886 billion bushels. While soybean exports should exceed this level, the current weakness in exports is reflected in five major export markets for soybeans. Through February, soybean exports to China, which typically accounts for 60 percent of U.S. exports, sit 11 percent behind the totals from the three previous marketing years during the same period. In conjunction with the lagging pace of Chinese exports, Japan and Indonesia sit 12 and 3 percent behind the pace of the previous three marketing years respectively. Mexico and Thailand imports of U.S. soybeans are up 3.2 and 110 percent under the same conditions.



Cumulative soybean export inspections through April 5 total 1.572 billion bushels. Through February of this marketing year, Census Bureau exports outpaced soybean export inspections by approximately 33 million bushels. If this difference continued, soybean exports through April 5 totaled 1.605 billion bushels. Soybean exports for the rest of the marketing year need to average 23 million bushels per week to reach the USDA projection. Soybean export inspections over the previous four weeks averaged 19.9 million bushels. Recent soybean export sales witnessed a jump last week as Brazilian export prices ran at a substantial premium to U.S. export prices. The sales indicate an expansion of purchases from buyers who typically leave the U.S. market to purchase Brazilian soybeans at this time of year.

If these buying opportunities continue, the potential for an uptick in export pace may be in order over the short run. At this time, soybean exports fall well short of the current projections and the possibility of a significant reduction in the soybean export projection appears likely.
While exports continue the weaker than projected pace, soybean crush is strengthening as the marketing year progresses. Current USDA projections for the 2017–18 marketing year crush sit at 1,960 million bushels. Estimates of monthly soybean crush from the Oilseed Crushings, Production, Consumption and Stocks report through February totaled 1.01 billion bushels. For the first half of the marketing year, USDA monthly crush numbers have run approximately 6.4 percent above last year’s crush estimates. Over the previous two marketing years, soybean crush during the first half of the marketing year averaged 51 percent of the final marketing year total. At this rate, the total crush for the marketing year would reach 1.98 billion bushels. Crush during the last half of the marketing year needs to total 950 million bushels to reach the USDA projection, 3 percent larger than last year over the same period.



In support of expanding crush levels, soybean meal exports are on pace to meet the 12.4 million short tons projected by the USDA. Through the first five months of the soybean meal marketing year, meal exports came in five percent above last year’s pace, at 5.508 million tons. Given a continuation of current soybean crush margins and export levels in soybean meal, the prospect of exceeding current USDA projections is quite high. While the USDA may not adjust crush totals in the upcoming report, the current crush pace indicates an increase of 20 million bushels in projected marketing year crush is feasible.

The potential for soybean crush levels to make up the difference for weak export totals is limited this marketing year. If the soybean export pace does not pick up substantially over the remainder of the marketing year, 2017–18 marketing year soybean ending stocks will increase. The current weather combined with trade policy issues make the soybean price susceptible to rapid changes as we move into planting season. A marketing plan for new crop soybeans should incorporate this information and provides pricing opportunities during near-term rallies.

How to Properly Use Dicamba on Soybeans

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As the growing season approaches it is important for farmers to understand how to use dicamba on resistant soybean varieties. Todd Gleason has more with University of Illinois weed scientist Aaron Hager.



The following is an excerpt from the March 23 farmdocdaily article posted by University of Illinois Weed Scientist Aaron Hager.

Steps for Successful Weed Management in Dicamba-Resistant Soybean

Step 1

• plant dicamba soybean seed into a weed-free seedbed
• achieve a weed-free seedbed through the use of preplant tillage, an effective burndown herbicide(s), or a combination of tillage and burndown herbicides

Step 2:

• select and apply within 7 days of planting a soil-residual herbicide that targets your most problematic weed species; if desired (and labeled), add dicamba and an appropriate buffer
• for waterhemp or Palmer amaranth, select a product containing the active ingredients from one of the following categories of control:

Excellent	Good	Acceptable
sulfentrazone	pyroxasulfone	S-metolachlor/metolachlor
flumioxazin	metribuzin	acetochlor
fomesafen+metolachlor	dimethenamid	pendimethalin

• Excellent: greatest efficacy on Amaranthus species and longest residual control
• Good: good efficacy on Amaranthus species, residual control generally not as long
• Acceptable: stronger on grass species but with some activity on Amaranthus species

Step 3:

• scout fields 14 days after planting, apply dicamba at 0.5 lb ae/acre when weeds are less than 3 inches tall and when conditions allow for the application, consider adding an approved soil-residual herbicide to the tank mix

Step 4:

• scout treated fields 7 days after the dicamba application; if control is not complete or another flush of weeds has emerged, consider using non-dicamba options for complete control; examples include alternative herbicides, cultivation, and hand rogueing; the goal should be zero weed seed production

Export Outlook for Soybeans

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Recent data on the soybean export pace indicates stronger weekly sales. This offers hope for meeting the USDA marketing year export projection. The size of the 2018 crop in South America and the competitiveness of U.S. export prices, says University of Illinois Agricultural Economist Todd Hubbs, remain essential to determining U.S. export possibilities for the remainder of the marketing year.

ILLINOIS Ag Economist Todd Hubbs discusses the potential for U.S. soybean exports to meet USDA’s stated marketing year goal with Todd Gleason.

Exceptional Corn and Soybean Yields in 2017

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Many areas of the country had above trend yields in 2017. While still not the majority, county yields of over 200 bushels per acre are becoming common and may be expected in the center of the corn-belt. Similarly, counties with over 60 bushels per acre are occurring with some regularity. Todd Gleason talks with University of Illinois Agricultural Economist Gary Schnitkey.

Above Trend Yields or Higher Prices Needed to Break-Even in 2018

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Farmers figuring crop budgets for this year will face an uncomfortable reality. In order to break-even on cash rented land, generally speaking, it will require above trend yields, higher prices, or some combination of the two.



2018 is shaping up very much like the last two years says University of Illinois Agricultural Economist Gary Schnitkey. Each of them began with dire price and income outlooks. Higher than average trend yields financially salvaged what were expected to be very poor seasons on highly productive soils in central Illinois. FBFM (Farm Business Farm Management) records show farmers in this area of the state harvested 228 bushel corn and 69 bushel soybeans on average in 2016 and, while the numbers have not yet been fully summarized, project 2017 yields at 221 and 68.



Since 2012 corn and soybean yields in central Illinois have been at or above trend. The weather and management will need to produce another year of above-trend yields in order for cash grain farmers to break even again this year.



U of Illinois’ Gary Schnitkey calculates break even will require a $3.97 average cash corn price with a trend yield of 202 bushels to the acre. If the average yield is 229, then the average break even cash price would be $3.50. The figures for soybean are $9.85 at the 61 bushel trend and $8.84 with a 68 bushel yield.

Bad Weather Rising

An agricultural economist at the University of Illinois is looking for a long-term recovery in the commodity markets. Commodity prices have been low since 2014, but the price of farmland has remained fairly strong. This is an indication thinks University of Illinois’ Scott Irwin that those buying farmland believe his contrarian view that prices will recover say to $4.00 for corn, $10.75 for soybeans, and $4.75 for all wheat. That’s at least one way to reconcile the firmness of land values. These long-run investors, whether they be farmers or outside investors, are looking for higher averages to restore profitability.

Irwin says there are two reasons for commodity prices to increase. One of them is slow. It’s the return of better economic conditions across the planet. The other he says is fast and violent, “I think it will be a series, in a fairly short period of time, of really poor weather that will be the big event that pulls us out.”

The ag economist is looking for the return of a more normal frequency of bad weather in the United States. Noting that the last twenty-plus years have been the best series in terms of corn belt weather since 1895.

Corn, Soybeans, and Wheat Acres in Illinois

Between 1996 and 2017, the sum of acres planted to corn, soybeans, and wheat have varied within a tight band for the state of Illinois. It has ranged from 22.0 million to 22.7 million acres for the three crops. Over this period acreage planted to wheat has been small and declining. It has decreased from 1.7 million in 1996 to just half-a-million in 2017. University of Illinois Agricultural Economist Gary Schnitkey says most of the acreage switches in the state have been between corn and soybeans.



These are the historical facts for Illinois. In 1998, corn and soybean acres were each at 10.6 million. With some yearly variations, corn acres then increased and soybean acres generally decreased from 1998 to 2012. In 2012, 12.8 million acres of corn were planted and 9.0 million acres of soybeans. Since then, corn acres have decreased and soybean acres have increased. Corn acres declined from 12.8 million in 2012 to 11.2 million in 2016. Soybean increased from 9.0 million to that same 11.2 million over the same period.

IFES 2017: Crop and Livestock Price Prospects for 2018

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by Todd Hubbs, Commodity Markets Specialist - University of Illinois

CROPS

Crop prices will remain below the high levels seen in the early part of this decade due to large global inventories. Global economic growth continues to build on the momentum seen over the last year. Growth in China and emerging market in Asia is projected to remain strong throughout 2018. The prospects of improved growth support commodity demand, but the significant changes to trade policy could mitigate some of this demand growth in export markets. Lower prices are expected to continue in 2018 barring a shortfall in one of the major production regions. The following price outlook analysis assumes a good 2018 growing season.

Corn prices continue to struggle with large crops and five consecutive years of growth in ending stocks. Domestic corn demand continues to see moderate growth in corn used for ethanol which has been supported by record levels of ethanol exports. Growth in livestock production and low corn prices provide support for increased feed usage during the 2017–18 marketing year. The potential for greater than 5.5 billion bushels in feed and residual use would be the largest amount since 2007–08. Corn exports currently lag the pace of last marketing year’s 2.29 billion bushels and are projected at 1.95 billion bushels by the end of the current year. Planted acreage of corn is expected to increase slightly in 2018 to 90.8 million acres. Assuming a trend yield near 172.3 bushels would result in a 2018 crop near 14.4 billion bushels. A projected total use of 14.5 billion bushels would result in the 2018–19 marketing year ending stocks near 2.44 billion bushels, a slight decrease from 2017–18 projections. Prices are expected to average near $3.30 during the current year and near $3.40 during the 2018–19 marketing year if production develops as expected.

Soybean prices remain strong relative to corn and wheat prices. U.S. soybean ending stocks continue a five-year pattern of growth with 2016–17 ending stocks ending at 301 million bushels. The lower than initially projected ending stocks benefited from very strong export numbers driven by continued growth in exports to China. Soybean exports are projected to exceed 2.2 billion bushels during this marketing year, up from last marketing year’s 2.174 billion bushels. Expanded soybean acreage and a 49.5 bushel yield for the 2017 crop are expected to increase 2017–18 marketing year ending stocks to 480 million bushels. Planted acreage of soybeans is expected to increase moderately to 90.6 million acres in 2018 due to the low prices of corn and wheat and the lower cost of producing soybeans relative to corn. A yield near 48.5 bushels would result in a 2018 crop about 52 million bushels smaller than the 2017 crop. With total use projected at 4.32 billion bushels, a further increase in U.S. stocks is expected by the end of the 2017–18 marketing year. Prices are expected to average near $9.20 during the current year and near $8.80 during the 2018–19 marketing year if world production develops as expected.

U.S. wheat acreage is expected to continue declining. Planted acreage decreased to 46.01 million acres in 2017. U.S. wheat production decreased by 508 million bushels in 2017 with average yield down by 6.3 bushels per acre. Soft red winter wheat production decreased to 202 million acres on 230,000 fewer acres nationally. Soft red winter wheat production is down 49 percent from 2010–2017 in Illinois. During the same period, wheat acreage in Illinois declined by 450,000 acres. World wheat production in 2017–18 is expected to decline slightly from the record levels of 2016–17. Foreign wheat production is expected to increase for the fifth consecutive year. U.S. stocks of wheat in all classes are projected to decline to 935 million bushels after hitting 1.18 billion bushels in 2016–17. U.S. soft red winter wheat ending stocks are expected to grow by 7 million bushels in 2017–18. The average price received for the 2017 crop is expected to be near $4.60. The Illinois price at harvest is expected to be near $4.75.

LIVESTOCK

Livestock markets continue to respond to the growing demand for meat globally and lower feed costs. Prices in the livestock sector look to level out after declining from the highs seen in 2014 and the subsequent supply response. Production levels are expected to increase in 2018.

U.S. beef production is expected to increase 4.6 percent in 2018 on higher levels of feedlot placements in last half of 2017 and the beginning of 2018. Beef production is forecast at 27.6 billion pounds in 2018, up 1.2 billion pounds over 2017. Beef export markets continue to exemplify U.S. competitiveness in foreign markets. Exports are projected at 2.97 billion pounds, up from 2.85 billion in 2017. Recent strength in export markets has been driven by strong demand from Japan. Domestic per capita beef consumption is projected to increase in 2018 to 59.2 pounds, up 1.9 pounds from 2017. Strong demand in 2017 moved cattle through feedlots at a rapid pace. Fed cattle prices look to move lower in the first half of 2018 on large supplies. Fed cattle prices average near $122 in 2017 but look to average near $117 in 2018. Feeder steer prices averaged $145 in 2017 and are projected to be around $142 in 2018.

U.S. pork production is projected to increase in 2018 to 26.9 billion pounds, up 1.2 billion pounds from 2017. Delays in hog slaughter levels in the fourth quarter of 2017 are projected to push first quarter pork production in 2018 up 4.7 percent of 2017 levels. Pork exports in 2018 are expected to increase from the 5.6 billion pounds exported in 2017 to 5.9 billion pounds. While increased exports to Mexico helped to support the export pace thus far in 2017, lower export levels to Japan and China is currently a drag on pork exports. Domestic pork supplies in 2018 are forecast at 52.1 pounds per capita, up from 50.4 in 2017. The average hog price is expected to decrease to $45.00 in 2018, down from $49.01 in 2017

What Is Up with Soybean Yields

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by Scott Irwin, Agricultural Economist - University of Illinois

Soybean yields in the U.S. have been very high the last four years. The U.S. average yield set new records in a stair-step fashion each year between 2014 and 2016. The 2016 yield reached the remarkable level of 52.1 bushels. While not a record, the 2017 yield (based on the November 1 USDA estimate) was 49.5 bushels, the second largest ever. On top of the high U.S. average yields are the numerous reports of field-level yields in the 70s, 80s, and even a few in the 90s.





The high soybean yields of recent years have sparked a debate about what is driving the exceptional yields. In thinking about this debate it is important to understand that there are only three possible sources of soybean yield gain. The first is weather during the growing season. The second is genetic improvement in soybean varieties. The third is a management, which encompasses all aspects of the soybean production process. Genetic improvement and management sometimes go hand-in-hand so that one requires the other.

It is a not an easy task to disentangle the complex and sometimes interacting impacts of weather, genetics, and management on soybean yields. One approach is to use a crop weather regression model to estimate the separate impacts of weather and technology on soybean yield, where technology is the combined impact of genetic improvement and management. I estimated this type of model for U.S. average soybean yields over 1970–2017. A linear time trend was used to represent technological change and summer precipitation and temperature variables were used to represent growing season weather. The modeling results showed that U.S. average soybean yields in 2014, 2015, and 2017 could be explained by a continuation of the linear improvement in technology and good growing season weather. The exception was 2016, when yield was substantially higher than what could be predicted based on a linear technology trend and good weather. It is not clear from this exercise whether we should view the 2016 yield like a 100-year flood or a permanent jump in soybean yield potential.

Agronomic data can be helpful in further disentangling genetic improvement from other sources of soybean yield gain. One recent study collected seed for over 150 soybean varieties released from the 1920s through the 2000s. Using randomized trials from across the country in 2010 and 2011, the study estimated “pure” genetic improvement in soybean yields. The results indicated a linear progression of soybean genetic yield gain from 1970 through 2008. This indicates that the historical pattern of soybean genetic gains in yield have been steady and marked jumps in the rate of improvement are rare. Soybean variety test results from the Department of Crop Sciences at the
University of Illinois provide relevant data through 2017. The yield of conventional soybean varieties relative to the older Williams variety shows no change of trend in recent years. Overall, there is little evidence to date that soybean genetics have been improving at a faster rate in recent years.

If we dig into the soybean yield data for the U.S. state-by-state an interesting pattern emerges that points to important changes in management practices. In general, soybean trend yields in the Southeastern U.S. have been growing at a much faster rate than in other growing regions. This non-linear trend appears to be related to a number of management practices, which can be roughly described as having the purpose of replicating Midwestern growing conditions. This includes planting much earlier in the past, planting earlier maturing indeterminate varieties, including corn in the crop rotation to increase organic matter in the soil, and using raised bed production systems. These management practices have allowed soybean yields in the Southeast to largely catch up with those in the rest of the country.

In sum, the data indicate that the biggest factor explaining high soybean yields in recent years is simply exceptionally good growing season weather. Improved management practices, particular in the Southeastern U.S., have also certainly contributed. A jump in the rate of genetic improvement in soybeans was not likely a big contributor to the surge in soybean yields.

U.S. Crop Acreage Still Moving to Soybean

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Todd Gleason reports on the move away from wheat and towards soybeans.

Corn is king in the United States. Soybean has been on a swift move upward. And wheat acreage has been on the decline for about 40 years. About half-way through those 4 decades two important things happened. Congress passed the 1996 farm bill - often called Freedom to Farm because it eliminated the last vestiges of supply controls for program crops and Monsanto introduced Round-Up Ready soybeans, that was 1995. The latter made it a whole lot easier to raise beans and the former, says University of Illinois Agricultural Economist Gary Schnitkey, let farmers react to the market.



From 1996 to 2012 U.S. farmers increased soybean acreage by 20 percent, corn acreage was up a bit more, but not much, and wheat acreage plummeted 36 percent. Schnitkey says much of the change can be explained by just looking at the relative profitability of the crops. Corn and soybeans are more profitable than wheat. Most would likely say the reason wheat acreage has declined in the U.S. is because of the ethanol build-out. It is, but it’s also not says Schnitkey, "You can attribute that to a number of factors. Probably the bigger one is that corn has increased its yields at a pace relatively faster than wheat. This has caused the relative profitability of corn to be higher than wheat and corn has taken over the feed grain market.

This has caused the relative profitability of corn to be higher than wheat and corn has taken over the feed grain market.

Wheat is/was the primary feed grain for much of the world. In the United States corn is fed to livestock and used to make ethanol. It is best managed when rotated with other crops, the most profitable of which is soybean.

This past year U.S. farmers planted about 90 million acres of corn and 90 million acres of soybeans. It is a new trend, says the University of Illinois ag economist, driven by continued strong export growth for soybean. The United States is projected to export over 50 percent of the soybean crop this marketing year.

Soybean acreage has substantially gained on corn acreage since 2012. While last year the acreage planted was equal, U.S. farmers actually harvested about 6 million more of the soybean acres than they did of corn. So, by harvested acreage soybeans are the number one crop in the United States and it’s not that first time that has happened. The soybean was king in 2015 as well.

Weekly Outlook | Soybean Export Prospects for 2017-18

Up Next… U.S. soybean exports need to continue to build on the strength seen in the 2016–17 marketing year. The ability to exceed the current USDA export projections in 2017–18 is a possibility, but it is heavily dependent on South American production and the continued growth in demand from importers. Todd Gleason has more from the University of Illinois…