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Will soybeans muscle King Corn aside as farm favorite?

 

 

By DOUG GRAVES

Ohio Correspondent

 

COLUMBUS, Ohio — It’s no secret Ohio grows a great deal of corn and soybeans most years, but 2014 was something special for the latter. The state produced 245million bushels of soybeans in 2014 yielding an average 52.5 bushels per acre, both records.

Ohio farmers also planted the most acres of soybeans ever: 4.85 million. A simple trend for one state? No, this is nationwide – U.S. soybean farmers grow 55 percent more soybeans than they did 30 years ago, and do so on 35 percent less land. The reason for the upward trend, some say, is the higher return for soybeans.

"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," said Purdue University agricultural economist Chris Hurt.

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 a row, according to the report, which was based on a nationwide survey of 84,000 farmers and issued March 31. "The 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.

"In addition, soybeans are comparatively cheap to plant. The input costs are about half that of corn. When margins are tight, some farmers prefer to have less total dollars invested in each acre of land."

According to Hurt, the U.S. soybean market has been gaining strength in recent years largely because of increased exports to China and new exports to South America. "The growing demand has caused soybean prices to be strong relative to corn and wheat," Hurt explained. "This sends strong signals to producers that more soybeans are needed, and less corn and wheat."

The annual report showed farmers across the country expected to plant 89.2 million acres of corn this season, 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. Winter wheat, meanwhile, was expected to account for 40.8 million acres, down 4 percent from 2014.

Aided by mild weather for most of the 2014 growing season, soybeans broke both yield and harvest records in Ohio, mirroring a national record for the crop. Soybean production also set a national record at 3.97 billion bushels, up 18 percent from 2013. Farmers harvested a record 83.1 million acres in 2014.

Corn was a slightly different story. Yield for corn at 176 bushels an acre was an Ohio record, but less corn was planted in 2014 compared with 2013. The drop in acreage (200,000 fewer acres) led to a smaller harvest in 2014 (610 million bushels) compared with 2013 (649 million).

"It’s all about the margins," said Gary Skinner, a farmer in Delaware County. "Prices for corn were not high enough to make a profit."

Corn prices hit a record high of $8 per bushel during a drought in the summer of 2012. But a record crop in 2013 and another record in 2014 drove prices below $4. In neighboring Indiana, farmers expect to plant 5.8 million acres of corn this year, down 2 percent from 2014. These same farmers said they will plant 5.6 million acres of soybeans, up 2 percent from last year. Ohio farmers said they’ll plant 5 percent less corn but 5 percent more soybeans. Indiana and Ohio farmers said they’ll plant less wheat, by 13 and 11 percent respectively.

Hurt said corn enjoyed an upward trend in the 2006-10 period to meet new ethanol demands and livestock picked up some of the corn use. But he predicted soybeans are going to be the preferred crop by most farmers.

"The U.S. planted soybean has a reasonable chance of exceeding U.S. planted corn acres within a few years," he said. "The weakness of this bean in the 1980s was directly related to greater government program incentives to plant corn or wheat for the government support.

"The year 1996 was the first year of ‘Freedom to Farm,’ when the U.S. policy shifted to no set-asides and moved policy away from supporting the planting of one crop versus another. So that vertical line is significant in that starting in 1996, it has primarily been market forces that caused acreage shifts, with fewer distortions from U.S. farm policy.

"The overall direction since 1996 is clear – more corn (ethanol up until 2010) and more beans pretty much continuously since 1996. And, of course, much less wheat," Hurt added.

5/13/2015