Markets plead for soybeans; farmers have time to respond
Much has happened since early March that could sway farmers to take advantage of an increasing market for soybeans and plant more of the crop - a change that could help to improve projections of decades-low supplies, a Purdue University Extension agricultural economist says.
Chris Hurt reacted to a U.S. Department of Agriculture report Thursday (May 10) that soybean supplies relative to use could be at their lowest since 1965 after the 2012-13 cropping year. But the USDA used acreage data from an early-March survey of farmers' planting intentions, and farmers could have since changed their plans because of several developments around the world, Hurt said.
"The first change is the size of the South American crops, where expected corn production increased and expected soybean production decreased sharply," he said. "Primarily as a result of changes in South America, anticipated world corn production has grown by 250 million bushels and anticipated world soybean production has dropped by about 575 million bushels since the USDA's intentions survey was completed."
Another big change in the markets has been China's aggressive purchasing of corn and especially soybeans.
"Since the acreage survey was completed in early March, the USDA has increased anticipated corn exports for the current marketing year by 8 percent, while the anticipated soybean exports have grown by a much larger 18 percent," Hurt said.
An early start to the 2012 U.S. planting season because of favorable weather also has led to projections of high corn yields.
The abundance of corn and lack of soybeans has caused a stir in futures markets that could have farmers reconsidering their planting decisions. New crop corn prices have been declining since March, while soybean prices have risen about 70 cents per bushel.
"Grain markets have been asking for more soybean acres, and that request turned into a plea with the latest USDA updates," Hurt said. "Markets are now in their last-gasp effort to convince farmers to plant more acres of soybeans and fewer corn and spring wheat acres."
The changes in market prices have led to a shift in anticipated crop returns. For example, Purdue crop budgets on March 1 projected returns of $48 higher per acre on corn than soybeans planted on average quality Indiana land. By April 10, the budgets were projecting a $25-per-acre higher return on soybeans than corn.
After the May 10 reports, the price advantage for soybeans had surged to $78 per acre.
Market prices show that there are too many corn and spring wheat acres and not enough soybean acres - something Hurt said some farmers still can take advantage of by shifting to soybeans.