USDA’s Office of the Chief Economist is forecasting soybeans will reach a record 91 million planted acres in 2018—equal to that of their rotation partner, corn, at 91 million acres. Pro Farmer agrees with USDA that soybean acres will be equal to corn but expects fewer acres overall.
“We’re going to lose some wheat acres, and everyone I talk to in the South indicates they will plant more cotton acres than in 2017. Those acres will come out of corn and soybeans,” says Chip Flory, Farm Journal markets expert. “We will pick up some corn and maybe soybeans from winter wheat country, but I would guess most of those acres will go to sorghum. I think we’re going to lose corn and beans to spring wheat up in the Dakotas. When everything is said and done, I think we’ll pick up just a little bit of corn and beans; I like 90.5 on both for a total of 181 million acres.”
Before switching acres to another crop, Matt Bennett says to consider the potential market implications.
“The past few years the market has been essentially asking for soybeans,” says Bennett, a farmer and owner of Bennett Consulting in Illinois. “The price ratio for beans to corn has been robust. For fall prices, we’re looking at 2.75:1, which definitely suggests beans are more profitable than corn.”
Because of this, he expects some farmers will plant more soybeans than corn, and some might even consider planting soybeans after soybeans.
In many areas, soybean yields have been stellar for the past few years, and even in areas with yield risk, insurance guarantees could help farmers gain confidence in the crop.
“If we had $10.06 for an insurance guarantee for beans, you could guarantee breakeven at worst, even if yields are bad. Insurance might dictate what producers do, especially in high-risk areas,” Bennett says.
This year, farmers are expected to plant 253.7 million acres to the eight major row crops. That’s up 1.4 million acres versus 2017 and could mean farmers are looking for alternatives to corn.
“If you’re in sorghum country, there are some opportunities to market out for new crop 2018 that will give you better profits than corn,” Flory says.
Sorghum growers experienced a 30¢ to 40¢ improvement in basis [in December], according to Tim Lust, CEO of National Sorghum Producers. “We saw a push in price at harvest that’s not traditional, and I think it signals the need for sorghum acres.”
Just because some farmers will cut back on corn acres, it doesn’t mean it’s the wisest decision everywhere, Bennett notes. If you live in Iowa, Nebraska or any state with a strong ethanol or cattle feeding market, corn could still be the better cash crop. No matter what you choose, he says, be strategic about marketing practices.
“If the price on beans is what is prompting you to plant more, then you better be doing something to lock in that price,” Bennett says. “In early December, November 2018 beans were at $10.06 and just about everyone can make money on that. Protect that money on the table.”