Why South American Planting Intentions Could Influence Your Planting Decisions
Aug 29, 2012
Our friends over at "Oil World" confirmed last week the same thing I have been hearing out of South America for the past several weeks, which is that more soybean acres are going in the ground at the expense of corn and wheat acres. Their thoughts are soy plantings in Brazil will push to a record high of almost 71 million acres. Almost 4 million aces more than last year. One of the main driving forces is the fact soybean prices have climbed by close to 20% during the past year, while corn prices are just barely above double-digit gains for the same time period. If all goes as planned this growing season, Brazil will actually overtake the US as the world's largest soybean exporter. Corn acres are expected to fall from about 37.30 million down to about 36.30 million. Some additional wheat acres are also expected to be converted into soybean acres. Same type of scenario is playing out in Argentina where soy planting looks as if it will jump from 46.19 million acres to almost 50 million acres. Corn area looks like it will drop from 12.42 million acres down to about 10.86 million acres. Wheat acreage looks as if it will drop from 11.44 million down to about 8.89 million acres. The point is more producers in South America are going back to soybeans. If the balance sheet stays tight and the backend rallies (NOV13), I am thinking producers here at home could end up making a similar decision. Several corn-on-corn producers have told me they would love to have the chance to to go back to more traditional type rotations. They understand the nitrogen benefits that beans bring to the soil, and most all producers have seen the yield boosts in corn following beans. The problem is soy prices rarely get high enough to justify the switch in acres. This year might just be the exception to the rule. With wheat prices high and insurance guarantees looking good, I have to suspect a large number of wheat acres will go in the ground here at home. I am also thinking with the Canadian Wheat Board out of the mix, wheat from up north may start to more easily flow our direction. Net-net, we might end up with a glut of wheat if the weather cooperates. South America is going to plant beans from fence row to fence row. Hate to point out the obvious but corn should continue to be King.
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