Soybean and corn prices didn’t respond positively to USDA’s Crop Production and WASDE reports this week. The tune changed later in the week as prices turned on positive demand news.
On Friday, USDA confirmed 132,000 metric tons of soybeans were sold to China for the 2021/2022 marketing year. In total, USDA says private exporters reported soybean sales that totaled 396,000 metric tons.
The news was a starting point for one University of Missouri economist who says sales to China have slipped compared to this time last year, something USDA took into consideration for the October reports this week.
“The question was really on the demand side, specifically the soybeans,” Ben Brown told U.S. Farm Report during the 2021 College Roadshow. “We’ve had a hurricane hit some of our Gulf ports that have really slowed down our export inspections. We had a good week getting back up a little bit closer to speed. But when we look at overall commitments, both sales and what has left the country, on the soybean side we’re about 37%, down from where we were last year.”
As the soybean market tried to recover from the double digit losses it faced after the report, cotton prices have been gaining strength this fall.
“This has happened kind of against the fundamentals,” Texas A&M agricultural economist Joe Outlaw told U.S. Farm Report. “So, I expect this to be kind of short lived. And producers don’t want to hear it, but I’m far enough from home I can actually say these things. The fact of the matter is they need to be looking at marketing some of their crop at this price.”
As price and weather are typically the final determining factors in the acreage debate, this next season, input prices and availability may have the final say.
“I think expectations are going to matter a lot here and if folks really think they’re going to get soybeans in the ground,” said Scott Brown, agricultural economist with the University of Missouri. “And does that push soybean prices down relative to corn? So even with high input costs, perhaps we’re going to find producers who are going to try to stay with that rotation.”
The supply chain issues are having a direct hit on input availability. Farmers trying to lock in glyphosate and glufosinate aren’t just faced with higher prices, some retailers are also having trouble sourcing enough product. And as black swan events continue to cripple the fertilizer industry, fertilizer prices are reaching record highs. And the issues of both price and availability are weighing on farmers when trying to source key inputs across the board.
“The availability point, that is what I want to emphasize,” Brown added. “Because when we look at prices, soybean prices have fallen 70 cents since the start of the marketing year and $1.40 in the last couple months. And so that’s why I’m sitting here saying I’m not exactly sure if soybeans are going to give up that much acreage to corn, at least at the current point. But if we can’t source nitrogen, for whatever reason, you know that really starts to impact that and hinder that.”
While growers in the South may turn to more cotton, wheat or sorghum crops if inputs are a problem to price and source, Outlaw said it’s key to remember one thing: Farmers in the Midwest love to plant corn.
“When you look at these types of things, usually you say, ‘What’s the highest cost of production?’ And what crops have all these input costs? It’s cotton, rice, and corn,” Outlaw said during the live taping of U.S. Farm Report from Mizzou this week. “And so, obviously, there’s going to be some bidding of acres. In this part of the world, you have the choice between corn and beans. And frankly, it’s one of those things where even if it’s going to look like you ought to go towards beans, farmers here in the Midwest are sneaky, and you plant some corn regardless.”
Outlaw said the price picture can significantly change as each crop bids for acres heading into spring. And if the sentiment shows farmers are leaning toward planting more soybeans, that will prop up the price of corn during the winter months.
