The U.S. Department of Agriculture’s Prospective Plantings report indicates that farmers nationwide could be looking to soybeans as a financial safe haven in a difficult market, Purdue University agricultural economist Chris Hurt says. The number of soybean acres could reach an all-time high in 2015, while corn acreage is expected to decline for the third year in row, according to the report issued Tuesday The annual report showed that farmers across the country expected to plant 89.2 million acres of corn this year, down 2 percent from last year, but more than some analysts expected. Producers planned for 84.6 million acres of soybeans, which would break last year’s record of 83.7 million acres.
Dr. Hurt told HAT, as a result of the lower than expected soybean acreage number, soybean prices will be higher than expected in 2015, “We had been looking for something close to a $9.00 soybean price for 2015, but I think I would raise this now to around $9.25.”
Hurt noted that the Eastern Cornbelt did increase soybean intentions; but, in the west, producers have decided to stick with corn, “Producers in Indiana expected to plant 5.8 million acres of corn this year, down 2 percent from 2014. Ohio growers said they would plant 3.5 million corn acres, down 5 percent.” In Indiana, farmers said they would plant 5.6 million acres of soybeans, up 2 percent from last year. Ohio farmers planned on 5.1 million acres of soybeans, a 5 percent increase. In Indiana growers said they would put in 340,000 acres of winter wheat compared with 390,000 acres last year, a drop of 13 percent. Ohio farmers planned on 550,000 acres of winter wheat this year, down 11 percent from last year’s 620,000 acres. “This shift is a result of the anticipation of stronger financial returns for soybeans,” Hurt said. “Prices for all crops are depressed at the current time, and margins are expected to be tight. However, soybean margins have offered the best alternative of the three major crops.” He suggested that western states like Nebraska and Iowa have soil and climates better suited for corn and thus producers there decided to stick with corn rather than make the switch to soybeans.
As for how this changes marketing plans, Hurt says producers may want to consider selling old crop corn but hold tight to soybeans, “This does put a negative tone on the corn market. Those who thought we would get back to $4 futures may now be willing to sell at lower prices.” Hurt expects bases to weaken and large holders of 2014 corn may be advised to begin to sell some of that crop. Hurt said corn prices fell after the release of the Prospective Plantings report, and another USDA report the same day showing corn stocks left from the 2014 crop were about 115 million bushels more than expected.
“The combination of more old-crop corn than expected and more 2015 acres than expected was a one-two punch depressing corn prices,” Hurt said. In its quarterly Grain Stocks report, the USDA said soybean stocks totaled 1.33 billion bushels on March 1, up 34 percent from the same time last year. The amount of corn in storage totaled 7.74 billion bushels, up 11 percent from 2014.
He also suggests that a review of your Farm Bill choices may also be in order.
he Purdue Center for Commercial Agriculture planned to offer a webinar Wednesday (April 1) from 9-10:30 a.m. to provide analysis of the latest USDA reports and an updated crop outlook. Panelists are Purdue agricultural economists Corinne Alexander, Jim Mintert and Hurt. The webinar is free but registration is required athttps://www.agecon.purdue.edu/commercialag/.