The U.S. is likely to plant more soybeans in 2024 as increased demand for soy-based biofuels should boost profits, with many planning to reduce corn acreage as corn hovers near three-year lows.
At a time when drought in Brazil, the world's largest soybean** country, has led to a significant drop in soybean production, the increase in U.S. soybean production will help meet the growing demand for renewable diesel and animal feed. The other largest country, Argentina, is short of soybeans after last year's severe drought.
Meanwhile, U.S. corn is plentiful, hitting a record high in 2023. By Sept. 1, before the 2024 crop is harvested, U.S. corn stocks are expected to exceed 2.1 billion bushels, a five-year high.
In addition to maintaining a normal crop rotation that keeps the soil healthy, farmers are also concerned about the profitability of each crop. They took into account the high cost of seeds for corn and soybeans this year, as well as inputs such as pesticides and fertilizers. Corn requires more fertilizer than soybeans.
Chris Gibbs, a farmer in western Ohio, expects to cut corn production in 2024 in hopes of making better profits on soybeans.
"My gut feeling is that I'm going to plant a little less corn just because of the cost," Gibbs said. ”。Cash corn is now at production costs, and soybeans, we're still making a profit. ”
Gibbs' plan is in line with the USDA and at least one private company's early** U.S. soybean acreage expansion and corn acreage decreasing in 2024. On Nov. 7, the USDA projected that growers will plant 87 million acres of soybeans in 2024, 3.4 million acres more than in 2023. The USDA said corn acreage will fall from 3.9 million acres to 91 million acres.
S&P Global released a similar release last month, setting U.S. corn acreage at 91.35 million acres and soybean acreage at 87.15 million acres, according to an S&P filing.
A few months before planting began in April and May, U.S. farmers were already making crop decisions. Seed and fertilizer retailers often offer discounts to producers who book before winter. Corn and soybean crop insurance policies must be purchased by mid-March.
Labor costs can be a factor. Corn produces three times as much grain per acre as soybeans, which take up equipment and staff during harvesting, as well as grain storage space.
The market plays a key role in the decision of the acreage of the crop in the months leading up to planting.
Chicago Exchange corn is near its lowest level since late 2020. Benchmark CBOT soybeans are now 12% higher than at the end of 2020 after approaching a two-year low**.
North Dakota farmer Phil Volcker said, "We didn't make money on corn [in 2023]. ”。If we can hold $13 (soybeans), this seems to be a high **....One can make money with it. ”
A tightening scenario for soybeans
An indicator of supply and demand for food is a measure of the percentage of stocks remaining at the end of the marketing year as a percentage of total use. For corn, this stock utilization is expected to reach 149%, a five-year high. The USDA expects corn stocks to rise to 18 percent of total use in one year, the most in 20 years.
The situation is even more dire for soybeans. USDA's ** for the amount of soybeans remaining before the next harvest is 24.5 billion bushels, accounting for only 59%, the lowest level in three years, is expected to increase modestly to 65%。
Frayne Olson, an economist at North Dakota State University, said: "The soybean market says we need to be more aggressive and make sure that some of these acres are re-purchased. ”。
In recent years, soybean acreage in North Dakota, where wheat is traditionally grown, has expanded dramatically. Two new soybean crushing facilities in North Dakota appear poised to create long-term demand for oilseeds as part of a nationwide wave of soybean processing expansion aimed at supplying renewable diesel producers** vegetable oils.
Export demand will be an unknown for the corn and soybean markets in the coming months, which could influence planting decisions. U.S. soybean exports are set to decline this marketing year after a bumper Brazilian harvest dominated sales to China, the world's largest soybean buyer, in the U.S. Department of Agriculture**.
The USDA expects U.S. soybean exports to recover next year, largely depending on the size of Brazil's current soybean crop, as bad weather in Brazil slows planting. Export demand for U.S. soybeans picked up in October and November as China made a series of purchases of U.S. soybeans and concerns about the prospects for the Brazilian crop intensified.
Chad Hart, an agricultural economist at Iowa State University, said: "We face more competition [for soybean exports], but there's a bigger market," said Chad Hart, an agricultural economist at Iowa State University. ”。