Farmers Expect More Soybeans

By Katie Micik
DTN Markets Editor

OMAHA (DTN) — John Moore and his son, like many farmers this year, are planning on increasing soybean acres.

"We normally are 50/50, but we are looking to lower input costs," the Manhattan, Illinois, farmer told DTN. "We don’t see a whole lot of profitability in corn this year. To be honest with you, I wish we had seeded to alfalfa because I don’t see profit in wheat, corn or beans."

Farmers are facing difficult planting choices this year, and many expect USDA’s Prospective Plantings report to show an increase in soybean acres from last year’s 83.7 million acres.

DTN Analyst Todd Hultman said he’s been looking at new-crop cash bids for corn and beans in northwest Iowa and central Illinois. When he compared the bids to USDA’s estimate of production costs, which doesn’t include land expenses, it "leads me to believe that general expectations of less corn acres and more soybean acres are correct."

Hultman estimates corn acreage at 89 million acres and soybeans at 86.5 ma, but he thinks USDA will be a bit lower on beans at 85.5 ma in the report next Tuesday, March 31, at 11 a.m. CDT.

"USDA’s early-March survey of 84,000 producers has a 90% confidence interval of 3.2% for corn acres and 3.5% for soybean acres over the past 20 years," Hultman said. "That is a fairly good estimate for this early in the year, but it still has plenty of room for surprise later in the year, especially if the weather at planting time does not cooperate with early intentions."

DTN’s conversations with farmers in recent months have revealed several trends. The switch to soybeans is likely to be most prominent in areas with a history of heavy corn-on-corn production, in the fringe areas of the Corn Belt where corn production expanded in recent years like the Dakotas and the Delta states, and in areas that are currently wet and flooding like along the Ohio River.

"I’m definitely seeing more bean acres on cash-flow projections for 2015 when compared to what was grown in 2014," said Adam Stonecipher, vice president of commercial and agribusiness banking at First Midwest Bank in Danville, Illinois. "But I will add it’s not nearly as drastic or noticeable as it was from 2013 to 2014. Other bankers I’m talking to are seeing the same thing. Given that I am in an area that is traditionally heavy corn-on-corn, I would bet that, geographically speaking, we’re not the only ones making the decision to increase bean acreage."

A DTN 360 Poll conducted from Feb. 24 to March 5 showed that while 41% of respondents said they plan on keeping soybean acreage the same as it was in 2014, another 38% said they would increase soybean acres and 21% said they plan on increasing corn acres.

Based on the state-by-state breakdown of DTN’s poll data, Indiana and Ohio are leading the switch to soybeans with 60% of the producers from each state indicating more bean acres.

Most of the responses from Illinois and Iowa showed that farmers would leave soybean acreage unchanged from 2014 (53% and 49% respectively). Of the remaining responses, 37% and 35% said they’d increase soybean acres, respectively.

Kent Thomas, who raises corn, soybeans and wheat near Cairo, Illinois, said farmers in his area will stick to their rotation "unless weather dictates a move and as long as corn can be planted in a timely fashion. They won’t take a chance planting late. They will plant more beans."

While the majority of Nebraska’s respondents (55%) said they would stick to the rotation, 23% said they intend to plant more corn and 22% said they intend to plant more soybeans. It’s the only major Corn Belt state that showed greater intentions to plant corn in the poll, even though it was by a slim margin.

In Michigan, where Phil Carter farms, 47% of the poll respondents said they’ll switch more acres to soybeans this year.

"My planting intentions are for less corn for the second year in a row," Carter said. "Our area in Michigan had miserable crop(s) in 2014: late start, very cool summer coupled with lousy markets. Lots of our growers are still in limbo deciding what, if anything, to put in the ground."

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