Are soybean acres set to increase?

In February , I began using my phone to monitor temperature for Ohio and other locations. I thought it odd to see temperatures of nearly -30 when it was not nearly that cold. I thought my phone was beginning to fail. Finally, weeks later I realized my phone was reading Celsius not Fahrenheit. I had a good laugh at how one switch had such a profound effect, much like producers are experiencing the huge effect at another record soybean production from South America on soybean prices.

On March 31 USDA will provide their estimates of crop acres for 2015 as well as U.S. grain stocks as of March 1. For months, traders and analysts have expected 2015 U.S. soybean acres  to exceed those of 2014. Last year producers planted 83.7 million acres in soybeans. It was a surprise that yielded much head scratching when the USDA at their outlook forum in February estimated soybean acres at 83.5 million acres. With production costs retreating minimally this past year in spite of vast price declines for both corn and soybeans, soybean acres will continue the multi-year trend of year to year increases seen in past years. Last year USDA considerably underestimated soybean acres. At the February 2014 outlook forum USDA put soybean acres at 79.5 million acres. In the final tally for 2014, US producers had planted 83.7 million acres.

To get an overall feeling of crop acres, look at total acres for the top three U.S. crops of corn, soybeans, and wheat. In 2013, the US planted 228.4 million acres of corn, soybeans, and wheat. In 2014, the top three jumped to 231.1 million acres, due mainly to the big increase for soybeans. It is pretty easy to assume soybean acres in 2015 will jump as producers do all they can to cut operating costs.  They will work to survive for another year and years into the future. This year the 2015 USDA outlook forum projects the top three to fall to 228.6 million acres. Expect that wheat acres in the US will continue to decrease in coming years. This is not a one time occurrence. Many producers in Ohio are moving away from wheat or at least decreasing acres. Still others are finding wheat to be a special niche in their operations. Southern Ohio producers continue to include wheat due seeing strong yields for the past two years. They have experienced yields of 90 bushels or more while mastering techniques to duplicate those yields for years into the future.

The March 31 USDA report will also provide U.S. grain stocks as of March 1. Those numbers will show corn, soybean, and wheat stocks to be larger than last year in March. Producers continue to hold record amounts of corn in on farm storage. With April and spring planting soon upon us grain movement will slow even more in coming weeks. Corn basis levels have slowly gotten stronger the past two months with gains of ten cents or more the past two months. If corn moves quickly in big numbers, the basis could easily lose that ten cents in less than three weeks.

Producers will still have the opportunity to change base acres at their FSA offices for the next few days. In addition they have until March 31 to make program designations provided by the 2014-18 farm bill. ARC county elections for corn and soybeans continue to be extremely popular for Ohio’s producers. They are most willing to accept the ARC payments that seem to be a certainty for 2014 and 2015 rather than face the uncertainty of potential payments the PLC option may have given for crop years 2016, 2017, and 2018.

In the current environment of lots of bearish news for grains and the price declines surely to come tomorrow or months down the road, there are some glimmers of hope in the USDA February outlook forum. With that report USDA projected the 2015 corn yield to be 166.8 bushels per acre. That yield may be difficult to see unless we experience timely rains without dozens of 90 plus degree days during the critical summer growing season. While the 2014 corn yield was a record 171 bushels per acre, the current 20 year trend line yield is just 160.4 bushels per acre. Back to back record or near record corn yields may be a far fetched idea for 2015. Stay tuned to see how corn ending stocks fare in coming months.

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