King soy? Top crop by area in 2018 likely to be soybeans
The U.S.D.A. expects farmers, for the first time, to plant as many acres to soybeans as to corn.

WASHINGTON — King Corn’s crown, while intact, stands to lose some luster, according to recent forecasts from the U.S. Department of Agriculture. Annual corn production in the United States in the coming year and the next several years will far exceed that of any other major grain or oilseed. Corn yields simply are much greater than those forecast or currently possible for wheat or soybeans. But farmers will vote for the crop they prefer to grow this spring with their planters, and as they do, the U.S.D.A. expects them, for the first time, to plant as many acres to soybeans as to corn.

The U.S.D.A. in its Grains and Oilseeds Outlook, prepared for and released at the U.S.D.A. Agricultural Outlook Forum in Washington on Feb. 23, forecast areas planted to corn and soybeans for harvest this year at 90 million acres each.

And that may be just the beginning. According to the U.S.D.A. Agricultural Projections to 2027 issued in February, soybean planted acreage was projected to eclipse corn planted area in 2019 and remain larger in each successive year of the 10-year projection period.

Corn planted area was forecast at 90 million acres in 2019, the same as the forecast for the current year, but soybean planted area in 2019 was projected to expand to 91 million acres. Soybean planted area was projected to expand further to 91.5 million acres in 2020 and to 92 million acres in 2021, 2022, and 2023, before leveling off at 91.5 million acres from 2024 to 2027.

In contrast, corn planted area was forecast to be in a downtrend from 90 million acres in both 2019 and 2020 and then declining incrementally to 87.5 million acres in 2027. At the end of the 10-year outlook, 2027, the U.S.D.A. forecast there will be 4 million more acres planted to soybeans than to corn.

Brian Harris, an owner and chief financial officer at Global Risk Management, agreed with the long-range outlook calling for soybean planted area to eclipse corn area in the next 10 years and even suggested that 2018, not 2019, will be the year soybeans overtake corn.

“I think the number the U.S.D.A. has plugged in for this year may be a bit light,” Mr. Harris said. “The number we’re using in-house for soybean planted area in 2018 is 92.6 million acres.”

Mr. Harris pointed out that area planted to soybeans has increased about 20%, from 75 million acres in 2011 to 90 million in 2017. He expected continued growth in soybean planting in the next 10 years, but not at such a frenetic pace as in 2011-17, perhaps more in the area of a half-per cent to 1.5% a year. Mr. Harris said there were two principal reasons for steady growth in soybean plantings: China demand and biodiesel.

“China is not going away,” Mr. Harris said. “If anything, as incomes in China increase and the middle class there expands, China’s demand base for soybeans will continue to grow.”

Mr. Harris said while there was a lot of confusion, even consternation, in the market regarding Renewable Fuel Standard policy, “I think it’s clear, when you look around Europe and the United States, biodiesel is not going away.” He acknowledged there may be some tweaking of the R.F.S. program, but he expected biodiesel to continue to be a strong demand base that will help offset demand losses seen in other areas, such as food and industrial use.

Paul Meyers, vice-president, commodity analysis, Foresight Commodities, Inc., took issue with the U.S.D.A. corn and soybean plantings forecasts for 2018. Mr. Meyers said he expected farmers to plant more corn than soybeans in 2018, about 91.5 million acres to corn versus 89 million acres to soybeans. Mr. Meyers acknowledged the current soybean-corn price ratio of 2.6 (in favor of soybeans) suggested there was advantage to planting soybeans over corn in 2018. But he added because there was such a large increase in soybean plantings last year (up 6.7 million acres from 2016 compared with a 3.8-million-acre decline in corn plantings) and with crop rotation a factor after such a large increase, “we may see farmers give back a few of those acres to corn.” If the soybean-corn ratio increases to 2.7 or 2.8, though, soybeans may benefit, but planting decisions are being made now.

He agreed that longer term, given the U.S.D.A.’s price expectations for soybeans and corn, soybean plantings should exceed corn plantings. He also pointed out that the U.S.D.A. forecast biodiesel demand to show growth in the 2018-27 period while ethanol demand was seen declining in the latter years of the 10-year outlook.

Mr. Meyers cautioned that corn and soybean plantings should not be considered in isolation of plantings of other major crops, particularly wheat and cotton. He said the U.S.D.A. shows growth in wheat plantings in the current year (46.5 million acres in 2018 versus 46 million in 2017) and a minor growth in wheat plantings through 2027, reaching 48 million acres in 2024 and holding at that level through the end of the projection period. He said the U.S.D.A.’s outlook for wheat was probably too strong and that some of the area the U.S.D.A. allocated to wheat in the projections may very well be planted to corn and/or soybeans instead because farmers were likely to continue to realize more profit from raising corn or soybeans compared with wheat.