Search Site   
Current News Stories

Michigan counties get nod of support from USDA disaster designation

 ITC is expected to make decision on Turkish cherry import


Iowa conservation committee rejects proposed crop buffer 


 Helena Industries to construct new chemical formulation facility in central Iowa

Ohio Farm Bureau awards ‘Action & Awareness’ grants


Farm boy went from delivering milk to pointman at the Battle of Iwo Jima

AgriInstitute to host roundtable discussion at Farm Expo.





New soil sampler more accurate and efficient



Hemp seminar will help Indiana farmers navigate these muddy waters



New steel tariffs directed to Argentina and Brazil

 Lebanon, Ohio celebrates Christmas in unique equine style


News Articles
Search News  
USDA projects drop in soybean plantings
Associate Editor

CHICAGO, Ill. — In business, even if one has a surplus of inventory, it may make sense to continue manufacturing if future demand for the product seems high. So at least one agricultural economist was surprised at the number of 2012 soybean acres proposed in last week’s Prospective Plantings report from the USDA.

From its March 1 survey of farmers, the USDA projects 73.9 million acres of soybeans to be planted across the United States this spring, which is down 1 percent from last year. According to Bill Tierney, chief economist with AgResource Co. in Chicago, this is a big surprise to market analysts who were expecting approximately 600,000 more acres in the ground.

“This is a somewhat unusual situation,” he said, adding that only in 7 percent of the time in the past 29 years were projected soybean plantings below market expectations.

Tierney said one reason soybean planting prospects might be down may be tied to more cotton acres planned than analysts anticipated. Even though the USDA reported cotton will be down 11 percent from last year, at 13.2 million acres, he said this is still higher than industry expectations. It was thought cotton acres would be pulled back even more, for soybeans.

Looking at the USDA’s Grain Stocks report also released last Friday, lower plantings might not seem so unusual, considering U.S. soybean stocks are up 10 percent over this time last year, at 1.37 billion bushels.

After all, Tierney and two other analysts speaking at a CME Group conference Friday morning weren’t surprised corn plantings are projected up 4 percent over last year, at 94.9 million acres – while domestic corn stocks are down from last year by 8 percent, at 6.01 billion bushels.

But, Tierney said, China has proven it will continue to be dependent on imports of oilseeds, including soybeans. This presumably puts American growers in a prime position to continue selling, especially since the USDA reported reduced estimates for soybean production in Brazil and Argentina by about 5 million metric tons earlier in March.

Kirk Leeds, CEO of the Iowa Soybean Assoc. – which recently sent representatives to China as part of a USDA trade mission – confirmed continued Chinese demand, driven by urbanization. He said U.S. soybeans will become “a significant portion of a much larger market.”

Both soybean and corn futures prices were up on the Chicago Board of Trade (CBOT) exchange at close of business Friday, over the day before. The November 2012 soybean price had gone from almost $13.05 to $13.58 and even old-crop May and July prices had risen by 47 cents each to top $14.

Chicago’s Linn Group Director of Research Jerrod Kitt doubts soybean plantings will stay at 73.9 million acres, and predicted farmers may add as many as 2 million more acres this spring. Tierney countered with a study that he said showed acreage changes made after the Prospective Plantings report comes out have historically been more influenced by weather than economic factors. He also said this USDA report tends to be a “very accurate predictor of final (numbers).”

“For whatever reason, farmers, tend to have a little more corn seed (than soybean) always available, and if they can plant, they’ll plant corn,” he added.

But Kitt cited talk in the industry about corn seed shortages and said growers could be forced to switch to soybeans if that’s a problem or if there’s a really wet spring that prevents or ruins corn planting. He also said net revenues for soybeans are 10 percent above those for corn right now.

Decreased corn stocks from this time last year are bullish for the market even with increased projected plantings, said Scott Shellady, with ICAP Energy in Chicago. CBOT futures bore him out Friday, with May and July corn ending limit-up from the previous day, at $6.44 and $6.43, respectively. 

The December 2012 new-crop price rose 16 cents to just over $5.40.

Shellady and Kitt both believe corn demand will continue to grow in China. Kitt pointed out the country’s self-sufficiency in growing its own corn has been steadily declining. He said while the Chinese government pulled back somewhat on soy imports recently to equalize its economy, people and livestock still need to eat and he believes these crops are “insulated” against any sort of recession there.

Tierney added China does need to import more feed grains for animals, but said its government needs to make a policy change to allow this to happen, as it did for oilseeds.

It would seem domestic ethanol could stay a continued strong market for corn, with the federal mandate for manufacture going up each year and higher gas prices. But, Kitt said the 10 percent “blend wall” means the U.S. market is saturated with the biofuel right now.

The U.S. Environmental Protection Agency may be getting closer to approving E15 for sale at more pumps, however. And last Friday, U.S. Rep. John Shimkus (R-Ill.) introduced a bill into the House, H.R. 4345, “to provide liability protection for claims based on the design, manufacture, sale, offer for sale, introduction into commerce or use of certain fuels and fuel additives.” It has the backing of the Renewable Fuels Assoc. and several related retail organizations.

If passed, this could provide legal protection against retailers being sued by consumers filling their tank with a non-suggested grade of biofuel. Though currently participating pumps are marked, Kitt said liability is a reason more fuel retailers don’t sell E15.

“That’s the theoretical fear preventing this,” he said – in addition to the costs of installing new pumps and equipment.

Spring wheat plantings – grown outside the Farm World coverage area – is estimated at 12 million acres, or 3 percent below last year, according to the USDA. Kitt said this is about 1 million fewer than expected. 

He said global wheat inventories are at near-record levels, but Tierney said there is worry wheat-growing regions such as Canada, Russia and Kazakhstan may be too dry for their usual production.