DES MOINES, Iowa – Farmers are expected to plant a record number of soybean acres this year, but fewer acres of corn as profit potential for the grain remains low due to slumping prices, the U.S. Department of Agriculture said Tuesday in its first report of the new crop season.
The USDA surveyed 84,000 farmers in March to assess their planting intentions for corn, soybeans and other major crops.
Farmers indicated plans to plant a record high 84.6 million acres in soybeans, up 1 per cent from last year. But corn acres will fall for the third consecutive year to 89.2 million acres, down 2 per cent from last year and the fewest since 2010.
More farmers are favouring soybeans because they cost less to grow and prices farmers receive for soybeans haven’t fallen as quickly as corn. Soybeans also can withstand broader weather variations. For example, in Iowa, the nation’s leading corn state, the grain costs about $4.23 a bushel to grow when land, machinery and labour costs are factored in, but gets less than $4 a bushel when sold.
Corn can still be profitable for farmers who own their own land and don’t have high overhead costs — particularly in the main corn belt states of Iowa and Illinois where per-acre yields can be high. Many farmers outside of those states, however, are betting they can make more money on soybeans.
North Dakota farmers will cut corn to 2.7 million acres, a significant reduction from the peak of 3.9 million acres in 2013 when corn prices were higher. Soybeans acres in North Dakota will grow to 5.8 million acres from 4.7 million in 2013.
“People that are starting to grow beans have found that in a good year they can produce above average beans and that’s worth planting to get the chance to get an excellent yield,” according to Craig Olson, who farms 3,000 acres with family members in southeast North Dakota. “The upside potential is way higher and the risk is lower for soybeans.”
Indiana farmers think so, too.
Michael Langemeier, associate director of the Center for Commercial Agriculture at Purdue University, said farmers planted 1 million more acres of corn than soybeans in 2012, but the difference narrowed to about 400,000 acres last year. The USDA report shows an extra 100,000 acres of soybeans will replace corn this planting season.
Elsewhere, Iowa corn acreage will fall by 100,000 acres to 13.6 million while soybean acres jump 200,000 acres to 10.1 million. Illinois also expects corn acres to fall while soybeans gain.
Nebraska looks to buck the trend seen in other states, as its corn acres will remain at 9.3 million, but soybeans will fall by 300,000 acres.
Low corn and soybean prices combined with continued high costs for land, equipment, fertilizer and other chemicals will challenge farm income for the third consecutive year.
The USDA estimates farm income at $73.6 billion this year, down nearly 32 per cent from $108 billion last year. Income in 2014 declined 16 per cent from 129 billion the year before.
“If 2015 plays out like we think it might and prices are low again at harvest, we’ll see more financial stress,” Langemeier said.
That kind of news ripples throughout the farm economy. Equipment purchases stagnate, affecting jobs at manufacturers including John Deere, which announced layoffs last August and more recently in January. Farmers also seek to cut costs by buying less expensive seed, which impacts sales for Monsanto, DuPont Pioneer and other major companies.
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