CHICAGO, Ill. (Reuters) — Rallying prices for soybeans are likely to encourage U.S. farmers to plant more of the oilseed this spring and could turn expected losses into profit.
They may also prompt growers to devote more acreage to corn.
Big gains in soybean acreage stemming from a spring price rally have historically gone hand in hand with additional corn seedings with farmers cutting back on specialty crops that require more care on hopes that corn prices will catch up to the gains in soy.
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Oklahoma farmer Jerod McDaniel said he is switching some acreage that he had initially planned to seed with sorghum to corn. Both corn and sorghum require nitrogen before planting. The costly input would be wasted if McDaniel seeded soybeans in the same spot.
“I will put in as much corn as I can,” McDaniel said.
“I kind of think you take your shots where you can right now.”
Corn acreage has risen from the March outlook in seven of the 10 years in which soybean acreage has posted the biggest gains from the initial forecast, according to U.S. Department of Agriculture data going back to 1980, which is the earliest year that the government’s report on what farmers intend to plant was available.
Gains in corn acreage have actually outpaced the soybean acreage increases in three of those years: 1982, 1987 and 1997.
Final soybean plantings have been an average of 1.704 million acres bigger than the March outlook during the seven years of big soy gains, when corn acreage also increased, while corn acreage gains have averaged 1.332 million.
The USDA’s prospective plantings report in March estimated that farmers would plant 82.236 million acres of soybeans and 93.601 million acres of corn.
Farmers have previously chosen to increase corn seedings along with soybeans, even when gains in soybean prices have far outstripped the corn market’s performance.
Corn prices have averaged a scant .3 percent gain during the planting season in the seven years when corn acreage gains accompanied big jumps in soybean plantings. By comparison, soybean prices have risen an average 3.8 percent.
This year, soybean prices have surged 17.9 percent since the USDA’s March planting forecast, while corn has gained 6.3 percent.
The renewed strength in the futures market comes at a time when concerns about plentiful global supplies and a choppy export outlook have cast a bearish tone over the market for much of the past year. As a result, farmers are looking at every acre available for seeding.
“If farmers can make money or break even, they find ground and they plant it,” said Tom Grisafi, a market adviser at Advance Trading.
