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Soybeans big in 2012 acreage plans

Soybeans big in 2012 acreage plans

• Most of the soybean acres that were lost were in the Southeast this past year, with the exception of Arkansas, Kentucky and Virginia, • Whether soybean acres go up or down in 2012 will depend on what corn prices do.

The outlook for 2012 is that we’re in for another acreage battle among the major crops, especially in the Southeast, where soybeans, peanuts, cotton and corn all will be competing for land.

When assessing the market outlook for soybeans, this factor must be taken into account, says University of Georgia Extension economist Nathan Smith.

“Prices for soybeans, like for other crops, are up over last year,” says Smith. “And when you look at the global demand for soybeans, it continues to grow, with China being the primary driver.”

Soybean prices are up approximately 20 percent from this time last year, he says, and global demand for soybeans and soybean products continues to show gains.

“When you look at the conditions for U.S. soybeans in 2011, they have continued to deteriorate, with below 55 percent of the crop being in the good to excellent range,” he says. Most growers were late planting this year, he adds, and the progress of the soybean crop has been late throughout the growing season.

“The late crop is reflected in the lower average yield projection compared with 2010,” says Smith. “There’s still the risk of running into weather problems as we harvest this crop, and with a late crop, the risk is even greater.”

Recalling the acreage battle from this past spring, soybeans lost some acres to corn, he says. U.S. acreage in 2011 was pegged at about 75 million, down about 3 percent from 2010, and harvested acres are projected to be down by about 4.2 percent due to problems experienced by growers during the spring. Yield is expected to be down by about 4 percent from last year with total production decreasing by 7.3 percent.

“Most of the soybean acres that were lost were in the Southeast this past year, with the exception of Arkansas, Kentucky and Virginia,” says Smith. “Oklahoma and Georgia basically cut their acres in half.”

Some states have rotation issues when it comes to corn and soybeans, but that’s not the case with states like Georgia, he says. Whether soybean acres go up or down in 2012 will depend on what corn prices do.

The estimated average yield for this year is below the trend yield for the United States, says Smith, with the trend average being approximately 44 bushels per acre.

“Looking at production and total use, we’re actually projecting use now to be a little bit higher than total production.

Soybean carryover tight

When you consider the estimated carryover from this year, it gets us back into a tight situation on soybeans.

“We’re basically seeing production down from last year, after a record year in 2009 and a near-record year in 2010, so it’s an ever-tightening situation. Basically, we’re seeing a trend in crushed being cut back.

“We saw our exports pick up in 2009 and 2010, and we exported more whole soybeans than meal and hulls to China because China has increased its crushing capacity. This, along with the lower value of the dollar, is helping our exports.”

The U.S. is down to a stocks-to-use ratio with soybeans of about 5.2 percent.

“When you look at the world production of oilseeds, the U.S. is the top nation in soybean production, but South America as a whole certainly has surpassed us in terms of production, market share and exports. With reduced production this year, we’ll probably see our export share drop from about 45 percent down to about 41 percent, and that’s partly driven by supply.”

China makes up about 60 percent of U.S. exports, so whatever China does will impact soybean prices and the soybean market in this country, says Smith.

“Soybean production in South America has grown by about 2 percent in 2011, and that growth has come from Argentina, because Brazil actually had a drop in its production,” he says. “Financing was an issue for them this year, so that’ll be something to watch as they plant the 2012 crop.”

China’s production of oil has been increasing, noted Smith. “They’re using more commercial feed which has higher protein, and they’re using more soybean meal and other protein sources in those feeds.”

In South America, the increase in soybean oil production has been going to biodiesel production instead of exports, he says.

“The supply and demand situation with soybeans basically is similar to that with other crops – they’re all starting to mirror one another. If things work out as they are forecast right now, I think we’ll see some price competition in the spring.”

However, soybeans are not competitive with corn, cotton and peanuts in Georgia, according to current prices forecasts, says Smith. “You have to get better yields than the average for Southern states before soybeans are competitive with other crops.”

There are about 325 million acres in principal crops this year in the United States, he says. “I don’t see a lot of new acres coming in because a lot of them came in this year. Some pine trees actually got put back into agricultural production this year in the South, and it probably cost about $3,000 per acre to convert them back to row crops.”

The bottom line is that there’s a tight supply situation for soybeans again this year, says Smith. “Exports and the value of the dollar will be keys going forward. As China’s GDP continues to grow, they’ll have an increasing demand for protein, and we’re in a position to provide it for them.”

TAGS: Outlook
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