Iowa soybean acres are expected to exceed 10 million for the first time since 2006, contributing to record plantings nationwide, according to USDA's 2015 Prospective Plantings Report, released March 31.
Soybean acres in Iowa are projected at 10.1 million acres, up 2% from last year according to the government's annual survey. Nationally, a record high 84.6 million acres are expected to be planted to soybeans, up 1% from last year.
Nation to plant record soybean acreage this spring
Farmers in the U.S. intend to plant a record number of soybean acres but plan to cut back on corn acres because of lower prices for corn, says Iowa State University Extension economist Chad Hart. Also, soybeans are less costly to produce than corn, another reason for more bean acres this year. Nationwide, corn plantings in 2015 are projected at 89.2 million acres, the lowest since 2010.
In Iowa, USDA is predicting farmers will reduce corn plantings to 13.6 million acres, a decrease of 100,000 acres from a year ago. Iowa farmers are expected to increase soybean plantings by 200,000 acres above 2014's 9.9 million acres.
Nationally, even though corn acres are estimated to be down from the 90.6 million acres in 2014, many market analysts were expecting farmers to devote even fewer acres to corn than what the March 2015 survey suggests.
Why expected corn acres are holding in there for 2015
or many farmers corn still can produce a bigger total return per acre than soybeans, since corn yield is larger. When you look at the marginal profitability this year in both crops, farmers haven't given up on corn, says Hart. While input costs for soybeans are less and bean prices are better compared to corn, for now farmers are optimistic they can squeeze more production out of each corn acre compared to beans. As a result, farmers are expected to hold onto more acreage for corn going into spring planting than some people anticipated prior to USDA's March 31 report.
USDA's March 31 planted acreage projections, the first ones made by USDA this spring, typically change based on future moves in grain prices and the effect of weather the next few months. The planting intentions estimates are based on surveys of more than 84,000 U.S. farmers.
Iowa projected to plant the most bean acres this year
The USDA report says planting intentions for beans are up or unchanged in 21 of 31 major soybean producing states. Iowa farmers are expected to plant the most soybeans nationwide. Illinois is second, projected at 9.9 million acres. Analysts say farmers are returning to more of the traditional 50/50 soybean-corn rotation due to tight profit margins.
Many farmers are struggling to stay profitable as prices of corn and soybeans have plunged below cost of production. Colin Johnson, a southern Iowa farmer, doesn't plan on any changes in his mix of corn and soybean plantings this spring. "For myself, for my cost of production, I'm right at the breakeven level at the moment," he says.
Grant Kimberley, market development director for the Iowa Soybean Association, says yields at the end of the year are more important than acres. Production and supply dictate prices.
Yields at end of the year are more important than acres
"Keep in mind, the U.S. blew past the old record soybean yield last year so it would be highly unlikely to achieve anything better than trend-line yield following a record like last year," Kimberley says. Even with projected higher acres, total soybean production in the U.S. in 2015 could still be lower than last year. Ideal August growing conditions are unlikely to be repeated. "A long growing season is still ahead of us and a lot can happen with the weather," he notes.
Farmers set record highs in U.S. production, yield and harvested soybean acres last year at 3.97 billion bushels, 47.8 bushels per acre and 83.1 million acres, respectively. Soybeans stored in all positions as of March 1 this spring totaled 1.33 billion bushels, up 34% from a year ago, according to USDA's Grain Stocks Report, released March 31.
The May futures contract price for soybeans on the Chicago Board of Trade fluctuated between $9.60 and $10 per bushel throughout most of March.
Iowa soybean leaders return from China trade mission
Iowa Soybean Association leaders returned to Iowa on March 31 from a 10-day trade mission to China, the world's largest consumer of soybeans. The ISA delegation learned that China's economy is projected to grow by about 7% this year.
"That should bode well for soybean demand over the next few years and possibly longer, but growth may be more moderate," says Kimberley. "Potentially, this will help utilize production from the extra soybean acres the U.S. plants this year."
ISA leaders heard mixed messages about soybean demand from Chinese buyers. Feed use for pork has softened and could flatten while aquaculture and poultry are expected to grow. The net result should be a slight increase in soybean demand.
The challenge this time is the strong U.S. dollar
"History has shown that the Chinese respond with stronger purchases when there are lower price opportunities," points out Kirk Leeds, CEO of the ISA. "Our challenge this time is that we are also facing strong supply numbers with a strong dollar, which gives Brazil an additional market advantage over the U.S."
Northwest Iowa farmer Tom Oswald, ISA president, says this situation makes it highly important to continue developing relationships with global buyers fostered through soybean checkoff-funded trade missions and market development efforts. "Now more than ever, we have to invest checkoff dollars to find additional markets for U.S. soybeans in places like Thailand, Indonesia and eventually India," says Oswald.