Market Matters Blog

Soybeans or Corn: Sow What?

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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As spring planting season draws near, will farmers plant more soybeans than corn because the economics of doing so says they should? Or will they stick with their normal rotations? (DTN photo by Elaine Shein)

USDA is estimating an increase in soybean acres this spring because the economics of doing so makes sense. But there are many who don't think that acres will increase by as much as the most recent predictions. I have talked to farmers around the Midwest about what their intentions are, and also to local elevators about what they have heard so far.

"It's a little early to decide 100% what I want to plant," a farmer told me at the Minnesota Grain and Feed Association convention last week. "If I start planting corn and the going is good, I'm not going to stop." A few other farmers in southern Minnesota told me they will stick with their rotations and have no plans to change that up.

Brad Kremer, a farmer from Pittsville, Wisconsin, and a board member of the American Soybean Association (ASA), operates a family farm consisting of 1,200 acres of soybeans and 1,800 acres of corn, wheat and alfalfa. He told me that his planting intentions are to plant "more soybeans, and in talking with farmers and the industry, it seems to be a bit of a trend in Wisconsin."

In southeastern North Dakota, an elevator manager told me that planting beans this spring "is real popular across the entire state, with the biggest expansion in the north and west. Still, here spring wheat plantings are off 15% to 20%. Wouldn't need much more of a bump in September wheat and that could change by 5% to 10%. Corn acres steady, canola steady, sunflowers up some."

Another manager in eastern North Dakota told me the plan is for more beans "but it'll be limited, they won't go all out. Rotations are too important to them." He said he sees bean acres up 10%, which will mostly take away from corn acres rather than other crops in his area.

"We will see more test plots of soybeans, peas, lentils, oats, Garbanzo beans; you name it as farmers look for positive cash flow," said Jerry Cope, who does the grain marketing for Dakota Mill & Grain, Inc. in Rapid City, South Dakota. He added that there was still a lot of uncertainty. He said that the insurance date to start planting spring wheat is mid-March in his area, "so there is still time, and I would suspect a higher percentage of spring wheat than last year. Oil sunflower cash flow with 2,000-plus yields has been positive, so those acres will grow. Corn continues the westward migration."

Ryan Wagner, a producer from Roslyn, South Dakota, said, "As far as planted acreage goes, it's not hard to see that soybeans will net more per acre right now than corn, but I don't think it's a slam dunk that there will be a huge shift. If you pencil in last year's yields at current prices, it's a no-brainer, and soybeans would easily outperform corn again. But I think guys are worried last year's huge soybean yields were an anomaly, and they are more confident that they can repeat last year's corn yields than soybeans."

Wagner told me that seed salesmen are saying that soybean seed sales are up quite a bit over last year, "but it's tough to judge strictly off that because farmers can easily switch their orders back to corn at the last minute if needed. Weather will play a huge role in acreage mix up here. It feels to me like guys will be a little quicker on the trigger to switch from corn to soybeans this year because of that price relationship, so if we are behind on corn planting in mid- to late-May, there will be a big switch."

Bret Davis, a soybean producer from Delaware, Ohio, is an at-large member of the governing committee of the ASA. He said, "Corn and soybeans here are mostly set as was planted last year. Changes from here on will be made as spring weather allows."

"I think we will see more corn than many are anticipating at this point," said Angie Setzer, vice president of grain at Citizens Elevator in Charlotte, Michigan. Her draw area runs throughout Michigan and into northern Ohio and Indiana. "Many of the customers I have, and the guys I've talked to across the countryside, are planning on keeping their rotational plans relatively unchanged," added Setzer. "I do have a few guys that are going to plant beans quite heavily versus what their normal planting intentions would be, but I also have customers that were planning on going heavy on beans that have changed those plans with the recent run up in corn."

Rob Shaffer, a farmer from El Paso, Illinois, and an ASA board member, said, "As far as beans being the crop of choice, my farming operations will be 70% corn and 30% beans this year. But this is only because of my rotation is that way due to the farms we have picked up via cash rent." He added that he believes soybeans pencil out better than corn, but if corn gets to $3.80 cash for fall 2017, that may change the equation.


Shaffer said that there was about 20% of old-crop soybeans left to sell until the futures rally on Feb. 28. "I am pretty sure that run-up bought a lot of beans," he said. "I know the basis widened out, so the processors and the river got a lot of corn and beans purchased."

Davis told me that, "Ten percent of my beans are unpriced and basis isn't set on 20% of priced beans."

Kremer of Pittsville, Wisconsin, said that he has sold all of his old-crop soybeans, but most of his old-crop corn was in his bins waiting for a rally. He isn't alone; some of the farmers I met at the MGFA said they had "a fair amount" of old-crop corn left to sell after taking advantage of the higher soybean prices since harvest.

In eastern North Dakota, one elevator manager told me that there is 15% of old-crop beans left on-farm with about 5% in elevator inventory on price later contracts. Another manager said that there is less than 20% of old-crop soybeans left in the bins in his area.

Setzer commented, "Most of my customers have very few of their soybeans left unhedged on the farm. I do have a few guys that have hedge-to-arrive contracts locked in and are waiting to see if we can capture any type of basis strength as we work into spring and early summer. For the most part, though, the amount of bushels left unsold on the farm is quite limited."

Wagner of Roslyn, South Dakota, said that he also thinks 20% unsold on soybeans is pretty accurate, and he thinks corn is probably closer to 50% unsold right now. "Farmers probably sold more corn than soybeans on the recent rally just because there is more corn yet to sell, and we made new highs for the move. I think corn basis this summer could get pretty ugly with all the corn that needs to come to town, and there is a lot of concern about that."

Tim Luken, manager Oahe Grain in Onida, South Dakota, told me as far as soybeans in his area, there were not many around for sale. As for what was going to be planted in his area, he said he feels producers are more confused this year than in any other year. He, like many of us, can agree with the conversation I had with a farmer from southern Minnesota: If weather is good while planting corn, then corn will keep going in the ground.

So, the burning question about what will be planted this spring may not be answered until the planting season is nearly in full swing. And besides the cash price having an effect on that decision, Mother Nature will also have something to say about it as well.

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