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Wednesday, April 20, 2016

Soybeans, the Switch is On - TV

ifr160422–089
Soybeans, the Switch is On - TV
Darrel Good, Agricultural Economist - University of Illinois

Ever since USDA released the Prospective Plantings report March 31st, many have been wondering if farmers will decide to switch a few corn acres to soybeans. The higher price of that crop, as Todd Gleason reports, seems to make this more likely.

Farmers told USDA in March they would plant about 82.2…
2:17 tv
2:33 tv cg

Farmers told USDA in March they would plant about 82.2 million acres of soybeans this season. This is one percent less than last year, and a million acres or so less than the trade had really expected. Prices have rallied since then and University of Illinois Agricultural Economist Darrel Good thinks that million acres could be back in play, but that it won’t really change much.

Good :33 …alter the supply expectation very much.

Quote Summary - I tend to think there will be some modest switching given the price reaction we’ve had since that report was released. Soybeans are considerably stronger than when the survey was done and corn prices are steady to weaker than when farmers were surveyed. I wouldn’t be surprised to see up to a million acres, perhaps, move away from corn to soybeans or perhaps some other crops.

Darrel Good and colleague Scott Irwin at ILLINOIS put together a supply and demand table for this year. They added 800,000 planted acres to soybeans, putting the figure at 83 million even.

It’s important to note that while the ILLINOIS projection uses a larger planted acreage figure, it also includes a much lower average yield. Good says there are two reasons for this.

Good :43 …fade that bushel or so based on the El Niño.

Quote Summary - Our calculated trend yields for both corn and soybeans would be a little less the USDA. So, we start a little lower than they start. And then we monitor the El Niño episode that tends to be fading pretty quickly right now. This suggests to us an elevated risk of below trend yields this year. We start with a lower trend yield on corn, 166.2, and I would want to fade that three or four bushels in my expectations right now. We’d start at 45.2 bushels on soybeans and fade that bushel or so based on the El Niño.

USDA will release its first projection of the current growing season supply and demand tables May 10th. Those numbers most assuredly will not yet update acreage, nor are they likely to include a deviation from trend line based on summer weather predictions.