U.S. farmers ponder more soybean acres as corn returns disappoint

Bullish on beans 


DECATUR, Ill. — In the northern hemisphere, the crop is on its way to the bin and with large amounts of it priced and delivery months established, farmers can turn their attentions to 2018.


Canadian farmers will largely see positive margins. That is not the case in the United States, where corn and wheat left red ink on the ledger sheets, with soybeans being only bright spot in what is mainly a two-crop system, with a little wheat thrown in.


Sam Funk, market analyst of Rabobank in St. Louis, Missouri, feels that with few options, most U.S. producers have settled into their production plans, with some farmers shifting to soybeans based on price. 


As well, soybeans’ lower input costs are attractive to many farmers because operational financing is becoming tighter.


“The U.S. baseline for grains and oilseeds is showing weakness for the corn and soy for the coming years,” said Funk in an interview at the Farm Progress Show in Decatur last week.


Illinois producer John Williams operates a fifth generation farm near Champaign and confirms Funk’s findings.


“We’ve been pricing our crops when we see what we feel are the highs in the market. But they aren’t very high and only a couple of times last year,” he said.


“We’re settling in for the long haul. These are more traditional prices and we are adjusting things including our rotation … beans will be the winner there. More acres,” said the producer, who attended the farm show hoping to find ideas to lower operating costs on the 3,200 acres he and his brother-in-law and their children operate.


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“We don’t see an upside to (winter) wheat right now, other than it’s cheap to grow,” he said.


Bryce Knorr of the publication Farm Futures said American farmers are looking at cost control and have restricted abilities to borrow operating money based on lower or negative margins and declining land values.


The result is potential for a smaller corn crop in the U.S. and Brazil next year. That, combined with the possibility that the U.S. Department of Agriculture has underestimated Chinese demand for soybeans, might cause producers to give soybeans a closer look for next year.


“I see corn prices stable for the next year, barring some weather problem someplace. Beans are looking better for growers,” Knorr said.


He said even if growers in the U.S. and Brazil pull back on corn, the carryout of U.S. corn, more than two billion bushels, will still be too high to cause prices to pick up.


“There is just too much out there and it doesn’t seem to be going away,” he said.


U.S. soybeans carryout is estimated at 475 million bu., supporting a price of US$ 9.30 per bushel. 


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Victor Ikeda of Rabobank in Brazil said the South American sentiment is similar and there is feeling among farmers that they overproduced corn last season. Most are planning for fewer acres for 2018.


Funk said in Canada, the economics are different.


“Farmers are doing far better. The diversity of crops and a soft (Canadian) dollar are keeping them up,” he said.“Canola support in the market is there. The other (specialty) crops are all in demand and prices are doing OK. They can’t compete in that feed market though. They need to avoid winter wheat or anything at ends up in the feed market. Just say ‘no’ to feed (grains),” he said.


“Canadian livestock should or could be using cheap American corn and (Canadian) farmers using their acres for a better purpose … ethanol too,” he said.


Williams said higher yields are a goal, but lower costs will remain the focus on their farm.


“It’s the new normal. Most of us, that have some grey hair, we’ve been here before. We learned what not to do, spend too much growing the wrong crop,” he said.


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