Planting focus all about soybeans

Planting focus all about soybeans

Planting surveys reveal increased soybean acreage at expense of corn acreage.

THE March 31 U.S. Department of Agriculture quarterly "Grain Stocks" and annual "Prospective Plantings" reports were eagerly anticipated last week as the results were expected to solidify a major loss of corn acres to mainly soybeans.

With high corn prices a thing of the past, farmers were expected to take advantage of utilizing crop rotation and the lower input costs associated with raising soybeans.

"Based on a farmer survey earlier this month, the report will reveal planting intentions for all major spring-planted crops," said Darrell Good, University of Illinois agricultural economist. "Estimates of both total planted acreage and acreage of individual crops will be important. Large prevented planted acreage in 2013 is expected to result in total planting intentions that exceed last year's acreage."

Additionally, Good explained that the generally favorable price of new-crop soybeans relative to other crops, particularly corn, was expected to result in intentions to plant considerably more soybean acreage in 2014 than in 2013. Intentions for corn were expected to be less than last year's planted acreage.

"One of the major benefits of the information in this report is to allow producers to adjust their planting intentions to market signals," Good said. "If soybean planting intentions are near the high end of expectations, new-crop prices will likely have to adjust to encourage fewer acres of soybeans and more acres of other crops.

"The size of the price adjustment, if any, needed to alter intentions may also be influenced by spring weather conditions," he added. "Prospects for a late planting season, for example, might require a larger price adjustment to discourage soybean acreage and motivate more corn acres."

Several farmer surveys released ahead of the report revealed that farmers were, in fact, planning to plant more acres to soybeans and fewer to corn (Table).

Private analytical firm Allendale Inc.'s survey results revealed soybean planting intentions of 83.212 million acres, which it said would be a record. Using Allendale's estimate of harvested acreage and its trend yield of 44.29 bu. per acre, the numbers would imply production of 3.639 billion bu., which also would be a record. Soybean production last year was 3.289 billion bu.

Rich Nelson, director of research at Allendale, said North Dakota and Indiana led soybean plantings with the largest increases. Both states showed a sharp decrease in corn plantings, as well. Nelson explained that for North Dakota in particular, many producers still had corn in the field from last fall, which contributed to the lower planting intentions for corn.

Allendale's survey showed corn planting intentions at 92.349 million acres, which would be the fourth largest since 1944. Using Allendale's estimate of harvested acreage and its trend yield of 163.06 bu. per acre, the firm said the numbers would imply the second-largest production of 13.781 billion bu. Last year's production was 13.925 billion bu.

Persistent winter weather conditions in the Midwest have farmers feeling uneasy about planting corn.

"In recent months, we have had quite a large snowfall that has been centered in the eastern Corn Belt," Nelson explained. "So, we have some issues that are going to be impacting corn planting this year."

A lot of farmers suggested that they are not confident enough to plant corn yet, Nelson noted. As of last week, he said farmers were focusing on soybeans.

Farm Futures' second survey of planting intentions showed that growers were responding to price signals.

Based on its survey of more than 1,600 growers, Farm Futures found that producers will plant 92.23 million acres, down 3.7% from the USDA November estimate and 5.3% less than growers' original intentions in 2013 before cold, wet weather prevented many fields from being planted. Still, if achieved, the publication said 92.23 million acres would be the fourth-largest planting since World War II.

Farmers indicated that they hope to plant 82.34 million acres of soybeans in 2014, up 7.6% from 2013 and easily a record.

Farm Futures said its first survey of growers last summer had found the shift out of corn already underway, with initial corn intentions at 94.11 million acres and soybean intentions at 78.75 million acres. Farm Futures senior market analyst Bryce Knorr said the market signals sent a clear message to farmers: Plant soybeans.

"When we first surveyed growers in late July and early August, the ratio of new-crop soybeans to corn was trading around 2.36:1," Knorr said. "During December, the ratio reached 2.58:1, providing a clear edge to soybeans, while projected corn profitability dropped to breakeven levels."

Rice Dairy senior feed grains analyst Jerry Gidel anticipated a 2.84 million-acre drop in corn seedings to 92.5 million acres and a 5.6 million-acre jump in soybeans to 82.1 million acres.

He attributed the soybean increase to "a new modern-era record because of China's insatiable demand for more protein to expand its meat supply for its ever-growing middle class."

Ahead of the report, Arlan Suderman, senior market analyst for Water Street Solutions, estimated that farmers will plant 82.3 million acres of soybeans, 91.70 million acres of corn and 55.90 million total acres of wheat.

 

Analysts' estimates for 2014 planting intentions, million acres

 

USDA Ag

 

Farm

Rice

Water

USDA

Crop

Forum

Allendale

Futures

Dairy

Street

2013-14

Corn

92.00

92.349

92.23

92.50

91.70

95.37

Soybeans

79.50

83.212

82.34

82.10

82.30

76.53

Wheat

55.50

55.324

57.64

55.94

55.90

56.16

 

Ethanol update

According to the U.S. Grains Council, present data indicate that it may take longer than expected before increased production and a rebound in U.S. ethanol stocks apply considerable pressure to prices.

Data from the U.S. Energy Information Administration for the week ended March 14 put the ethanol production rate at an average volume of 891,000 barrels per day, more than the prior week's rate of 869,000 barrels per day and more than 10% above the rate for the same week a year ago.

In the meantime, the weekly stocks level fell a substantial 4%, from 15.9 million to 15.3 million barrels for the week ended March 14. Of course, weather was a factor in this decline, but presumably strong demand also played a part since the total stocks level was 17.3% below the same period a year ago.

 

Market recap

Markets were mixed through last week as the trade awaited the March 31 USDA reports. Prices were mainly supported by the strong soybean market.

During the first half of last week, the corn markets were uneventful, but Farm Futures senior editor Bob Burgdorfer reported that an 89% jump in weekly export sales pushed Chicago, Ill., corn traders into action last Thursday as corn prices reached a two-week high.

Last Monday, nearby corn futures closed at $4.90/bu. but dropped on Tuesday and Wednesday to $4.865/bu. and $4.845/bu., respectively. By Thursday, markets reacted to the report of increased export sales and closed stronger at $4.92/bu.

Soybean markets were strong early last week despite reports of a large South American crop, according to Suderman.

"The trade's really worried that USDA is going to confirm very tight stocks in its report on Monday after an aggressive first half of the marketing year both in the export market and in the crush industry," Suderman explained last Wednesday after soybean prices finished the day higher.

Nearby soybean prices closed at $14.255/bu. last Monday but saw significant gains through the week due to expectations for tighter stocks. Nearby soybean prices closed at $14.28/bu. last Tuesday and closed 12 cents higher Wednesday at $14.40/bu. News of fewer export sales for soybeans sent prices slightly lower to close at $14.365. Suderman said Thursday's lower price was only a modest loss considering the gains the market has seen.

Knorr pointed out that both old-crop and new-crop soybean futures are following bullish seasonal trends, which point to higher prices. While higher prices are not a guarantee, he said the current trend is following the logic of years of tight stocks, when the market becomes more sensitive to any hints of weather disruption.

Volume:86 Issue:13

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