Soybeans Set to Challenge Corn as U.S. Crop King
April 20, 2018
Written By Adam Buckallew
For the first time in 35 years, soybeans are expected to be within reach of claiming the crown as the nation’s top crop.
A poll of 21 trading firms and analysts conducted by Bloomberg predicts 2018 will be the year soybeans unseat corn as the top U.S. crop. The survey respondents predicted an average of 90.69 million acres of soybeans will be planted and 90.12 million acres of corn to be sown.
The U.S. Department of Agriculture issued its own projections in its annual prospective planting report, which was released on March 29. The USDA forecast was mostly in line with traders’ expectations, though the agency forecasts farmers will plant 89 million acres of soybeans and 88 million acres of corn. Those estimates would have the acreage for both crops down slightly from 2017.
If the trading firms and analysts prognostications prove accurate, it would be the first time market forces would have driven soybean acreage into a position to pass corn. The only other time farmers planted more soybeans than corn was in 1983, when a government program called Payment in Kind (PIK) incentivized corn, wheat and cotton farmers to forego planting those crops in reaction to surpluses. PIK reduced corn plantings by 30 percent to 60.2 million acres vs. 63.8 million acres of soybeans.
Soybean acreage has been gaining ground on corn since the recent downturn in commodity prices began in 2014. Operating on the thinnest of margins, row-crop farmers have increasingly looked to soybeans in an effort to boost their net return per acre. The price ratio between new-crop November soybean futures and December corn futures on the Chicago Board of Trade has ranged from 2.5-to-1 to 2.75-to-1 in recent months, suggesting soybeans are likely to be the more profitable option for growers this year.
Robert Johansson, the USDA’s chief economist, says his agency’s long-term acreage projections to 2027 show the trend for more soybean acreage than corn continuing into the future.
“Our latest long-term baseline suggests soybean area will match or exceed corn area for much of the next decade supported by import demand from China.”