Soybean crop remains front and center

by Ron Sterk
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Soybeans were the “star” of the March 31 Prospective Plantings report. The U.S. Department of Agriculture said farmers intend to plant a record high 81.5 million acres of the oilseed in 2014, up 6% from 2013. But there were other significant numbers in the plantings report, as well as the quarterly Grain Stocks report released the same day.

Source: U.S. Department of Agriculture


The U.S.D.A. said March 1 soybean stocks in all positions totaled 992 million bus, down less than 1% from a year earlier. Even though the soybean plantings and stocks numbers were slightly above the average of trade expectations, nearby soybean futures prices soared to six-month highs above $14.50 a bu after the reports, mainly on concerns about tight old crop supplies.

As exciting as the soybean numbers were, corn was a close second if not also a star. The U.S.D.A. said growers intend to plant 91.7 million acres of corn in 2014, down 4% from 2013, when plantings of 95.4 million acres were the highest in 69 years, and production was a record high 13,925 million bus. March 1 corn stocks totaled 7,006 million bus, up 30% from the drought-reduced supply on the same date a year earlier. Both corn plantings and stocks numbers were below the averages of trade expectations, and corn futures prices jumped to seven-month highs above $5 a bu.

Although planting is well under way across the South, the mix of crops planted can, and usually does, change before the final acres are counted. But last week’s price action that sent nearby soybean values to nearly 2.9 times the price of corn would argue for strong soybean plantings, although it should be noted the new crop corn/soybean ratio (November soybean/December corn futures) is slightly below the key 2.5 times that generally favors soybeans.

It would take only an average soybean yield of around 42 bus an acre to reach record soybean production in 2014 (the current record is 3,359 million bus in 2009), which would provide welcome relief to processors facing tight supplies, due in part to stronger-than-expected exports. Another record large corn crop would be unlikely in 2014 due to the expected drop in acreage, but even an average yield should add to carryover stocks at the end of the 2014-15 marketing year on Aug. 31, 2015.

More light will be shed on the supply and demand picture for grains and the tight old crop soybean supply situation in the April 9 U.S.D.A. World Agricultural Supply and Demand Estimates report.

The wheat numbers in both reports were seen as rather uneventful, with all wheat plantings at 55.8 million acres and slightly below the average trade expectation, but the March 1 wheat stocks estimate of 1,055 million bus above the trade average. Most focus in the wheat market has been on the dry conditions in the hard red winter wheat region and continually declining crop condition ratings. Wheat futures prices were pulled higher by corn and soybean futures spillover the day of the report, but they retreated on April 1 while corn and soybeans continued to rise.

Winter wheat plantings, having been estimated in January, usually are adjusted only slightly, which was the case last week. But spring planted wheat numbers are new, with expected durum plantings at 1,799,000 acres, up 22% from 2013, and spring wheat other than durum (mostly hard red spring wheat) at 12,009,000 acres, up 4% from the prior year.

But there were some large swings in the “smaller” crops, with reductions in many Upper Midwest crops “gobbled” by increased soybean area. Planted area is expected to decline 7% for oats and 9% for barley, which would be the third lowest on record for both crops, with sugar beet area down 4% and grain sorghum down 17%. In the South, increases of 7% for cotton, 16% for rice and 29% for peanuts largely came from corn acres, as area for soybeans also increased in most southern states.

Weather, as always, will be a factor in determining the final mix of crops planted and final production numbers.

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