Iowa farmers are expected to plant 600,000 more acres to soybeans this year, as that crop promises a better price and overall return than corn. But the increase in projected soybean plantings still wouldn’t be enough to unseat corn as king in Iowa, which has led the nation in corn production for decades.
USDA’s 2017 Planting Intentions Report released March 31 provides the first official survey-based estimates of growers’ plans. The surveys were conducted during March from a sample of 84,000 farm operators across the U.S., with more than 2,900 from Iowa.
Iowa farmers plan to grow corn on 13.3 million acres, down 4% from 2016. Soybean acres are projected to climb to 10.1 million acres, a 6% increase over a year ago. Iowa’s record for soybean acres was 11 million in 2001. This year’s projected planted acres, if realized, would be the state’s largest soybean planting since 2006.
Iowa’s 13.3 million acres of corn for all purposes would be a decrease of 600,000 acres from 2016 and would be the state’s lowest-planted acreage of corn since 2008.
Big increase in bean acres
Nationally, farmers plan to plant a record 89.5 million acres to soybeans this year, and 90 million acres to corn. “It seems like almost everybody in the country wanted to grow more soybeans when this survey was taken. They hope to find stronger prices for soybeans compared to other crops over the past year or so,” says Chad Hart, an Iowa State University Extension ag economist.
Farmers in Iowa and elsewhere are hoping to find a repeat of last year, when decent soybean prices teamed with record production in Iowa and in the U.S. for higher returns than expected. “Farmers kind of busheled their way through last year,” says Wayne Humphreys, who farms near Columbus Junction in southeast Iowa. “The gross revenue per acre was a surprise.” The state’s corn yield averaged 203 bushels per acre and soybeans averaged 61 bushels per acre in 2016, compared to Iowa’s 10-year average of 174 bushels for corn and 51 bushels for soybeans.
Hanging over farmers’ heads as they prepare fields and plant this spring are projections by USDA economists and others that farm income will fall for a fourth straight year. Lower costs for growing soybeans — about $120 an acre less than corn — helps farmers, especially if cash is tight.
More soybeans are in storage
USDA’s latest Quarterly Grain Stocks Report, also issued at the end of March, shows big corn and bean supplies in the U.S., with Iowa storing 1.71 billion bushels of corn in on-farm bins and in elevators. That’s 12% more than a year ago in Iowa. Nationally, corn stocks in all positions totaled 8.62 billion bushels, up 10% from March 2016.
Source: USDA NASS March 2017 Planting Intentions Report
Iowa soybean stocks this year, at 310 million bushels in March, were 6% lower than a year earlier, while nationally supplies were 13% higher.
For many farmers, Iowa corn and soybean prices are below breakeven levels. ISU estimates breakeven prices between $3.60 and $3.70 a bushel for corn, and $9.60 to $9.70 for beans. Farmers are hoping for a price rally in April, May or June; similar to last year, as weather concerns in the U.S. and South America become clearer.
Iowa farmers are helped by strong built-in markets for corn and soybeans, with ethanol and biodiesel plants and large hog, beef cattle and poultry production. Iowa leads the nation in number of hogs and egg-laying hens. It ranked second in soybean production last year. One concern is exports, which have helped absorb corn and soybean surpluses in past years. President Donald Trump has talked about imposing tariffs on Mexico and potentially China, creating uncertainty for U.S. grain and meat exports.
Need exports, strong U.S. demand
With potentially another record soybean crop on the horizon, exports and domestic demand are more important than ever, says April Hemmes, an Iowa Soybean Association director, who farms near Hampton. She doesn’t plan to deviate from her normal crop rotation.
Weather this spring is the key factor to watch, she says. It’s more important than the planting intentions report, which caused soybean prices to drop initially after its release. “Truthfully, if I’m going to plant more soybeans this spring, it would be because the weather wouldn’t allow me to get into the field until late, and I couldn’t get all the corn planted on time.”
The big question is, will these USDA projected acres become reality? Steve Nicholson, grain and oilseed economist for RaboResearch, says final U.S. soybean plantings the last three years, on average, were 200,000 acres higher than projections. The five-year average, however, is 200,000 acres lower. Given that USDA’s 2017 soybean acreage projections are higher than many industry estimates, South America is harvesting a record soybean crop, and soybean prices are down more than $1 a bushel since March 1 on the Chicago Board of Trade, he expects farmers to switch some intended soybean acres to corn.
Barring a weather disaster in 2017, soybean surpluses are expected to grow and prices are to likely drop, analysts say. Soybean planting intentions are up or unchanged from last year’s acreage in 27 of the 31 estimating states in USDA’s survey. The strongest shift to soybeans is coming from wheat growers. The biggest jump is Kansas with a 23% increase in projected soybean acres, which would bring that state’s soybean acreage to 5 million total acres. North Dakota farmers intend to plant 850,000 more soybean acres this year, a 14% hike. Overall, USDA estimates the nation’s planted area for all types of wheat in 2017 at 46.1 million acres, down 8% from 2016. This would be the lowest total U.S. planted acreage for wheat since records began in 1919.