The latest report from the U.S. Department of Agriculture estimates that U.S. soybean supplies could be at their lowest level relative to use since 1965 following the 2012-2013 cropping year.
The report, released Thursday (May 10), includes the USDA's first estimates of crop size and use for the marketing year, but uses acreage data from an early-March survey of farmers' planting intentions. Much has happened since the survey was conducted, however, and that could have changed farmers' acreage intentions.
"The first change is the size of the South American crops, where expected corn production increased and expected soybean production decreased sharply," said Chris Hurt, Purdue Extension agricultural economist. "Primarily as a result of changes in South America, anticipated world corn production has grown by 250 million bushels and anticipated world soybean production has dropped by about 575 million bushels since the USDA's intentions survey was completed."
Another big change in the markets has been China's aggressive purchasing of corn and especially soybeans.
"Since the acreage survey was completed in early March, the USDA has increased anticipated corn exports for the current marketing year by 8 percent, while the anticipated soybean exports have grown by a much larger 18 percent," Hurt said.
An early start to the 2012 planting season also has led to projections of high corn yields.
The abundance of corn and lack of soybeans has caused a stir in futures markets that could have farmers reconsidering their planting decisions. New crop corn prices have been declining since March, while soybean prices have risen about 70 cents per bushel.
"Grain markets have been asking for more soybean acres, and that request turned into a plea with the latest USDA updates," Hurt said. "Markets are now in their last-gasp effort to convince farmers to plant more acres of soybeans and fewer corn and spring wheat acres."
The changes in market prices have led to a shift in anticipated crop returns. For example, Purdue crop budgets on March 1 projected returns of $48 per acre higher on corn than soybeans planted on average quality Indiana land. By April 10, the budgets were projecting a $25-per-acre higher return on soybeans than corn.
After the May 10 reports, the price advantage for soybeans had surged to $78 per acre.
Market prices show that there are too many corn and spring wheat acres and not enough soybean acres - something Hurt said some farmers still can take advantage of by shifting to soybeans.
"Many eastern Corn Belt farmers are nearly done with corn planting, but some might be able to shift small acreage," he said. "The greatest acreage-shifting opportunity lies in the Western Corn Belt where corn planting isn't as far along. This is especially true in Wisconsin, Iowa and the Dakotas."
Farmers also have the opportunity to plant double-crop soybeans after they harvest winter wheat, especially since wheat harvest looks to be a couple of weeks ahead of schedule.
In 2011, there were about 4.5 million acres of double-crop soybeans in the U.S. Hurt said that number this year could increase to 6 million to 6.5 million acres.
"In some form, the market would like to see 2-3 million acres shifted out of corn and spring wheat into soybeans," he said. "Knowing that farmers follow economic incentives and that the economic incentives for soybeans have sharply increased since the USDA last surveyed farmers, it is certainly possible to see that magnitude of acreage shifts when USDA releases their next acreage update on June 29."
(According to American Farm Bureau economists, the U.S. soybean supply is flirting with record low numbers and will fall to a 16-day inventory later this year. For that story, see http://southeastfarmpress.com/soybeans/us-soybean-supply-expected-dip-historic-low).