Soybeans are projected to be the nation’s most planted crop for the second time ever. However, total soybean and corn acres are considerably less than expected, according to grain analysts and today’s U.S. Department of Agriculture (USDA) Prospective Plantings Report.
March Madness, experts say, has indeed expanded beyond college basketball and given farmers a chance to cash in. May soybean futures initially shot up 40 cents per bushel after the bullish report’s release.
“Farmers should take advantage of the rally while they can with the current trade uncertainty with China,” said Don Roose, president of U.S. Commodities based in West Des Moines.
Like Loyola University Chicago, a team that defied the odds to make the Final Four, soybeans were historically the acreage underdog to corn. Until this year, the only time soybean acres supplanted corn nationally was 1983 due to the USDA’s Payment-in-Kind Program, which compensated farmers for not growing certain crops. Soybeans weren’t included.
The USDA projects 89 million acres of soybeans will be planted nationwide, down 1 percent from last year. The trade expected 91 million acres, as did the government. Iowa’s soybean acreage is pegged at 9.8 million, down 200,000 from last year, the report said.
Corn acres nationwide are projected at 88 million acres, down 2 percent or 2.14 million acres from last year. Iowa’s corn plantings are expected to be the same as last year at 13.3 million acres. Corn and soybean acres lost ground to cotton, up 7 percent; wheat, up 3 percent and other small grains.
Sam Showalter, an Iowa Soybean Association (ISA) member from Hampton, is looking forward to getting in snow-covered fields and making some soybean sales. He hopes to start planting corn by mid-April and soybeans by the end of next month.
“I’m optimistic heading into the growing season,” said Showalter, winner of the 2017 ISA New Leader Award. “There’s no reason to think we won’t get the crop in on time and have a good one.”
Roose said the unexpected, sizable reduction in soybean acres and a 20-30 percent drop in Argentina’s soybean production due to drought sparked the market. Some bullish fundamentals currently overshadow bearish concerns about possible retaliatory actions against U.S. soybean imports by China due to a trade dispute between the countries and burdensome soybean supplies. Today’s USDA Grain Stocks Report indicates 2.11 billion bushels are stored in all positions as of March 1, an all-time high.
“There are profit opportunities,” Roose said. “I recommend farmers by at-the-money puts and sell soybean calls at 20 cents.”
Grant Kimberley, ISA market development director, said there are a lot of moving pieces to the market right now. The Maxwell farmer, who recently returned from an ISA trade mission to China, referenced the potential China/U.S. trade dispute and reduced acre intentions as reasons why soybean prices will continue to be volatile.
“Add to that, a record Brazilian soybean crop, a major drought in Argentina hurting its yields and record domestic soybean supplies. Farmers need to monitor all soybean fundamentals when making pricing and planting decision,” Kimberley said.