Soybeans are attracting the same level of grower interest as corn in the Southeast this year, with continued strong prices expected to continue through the 2013 planting season.
“When you look at the prices we were projecting last year, it’s not too far from what we’re looking at now,” says Nathan Smith, University of Georgia Extension economist.
“There was a less than 8 percent probability we’d see the prices we saw in 2012. So we ended up with one of those rare years when we were fortunate to be in the South in terms of growing corn and soybeans because we benefited from the Midwest having a drought.”
Smith presented his soybean outlook during this year’s Georgia/Florida Soybean/Small Grains Expo held in Perry, Ga.
Georgia growers harvested record yields across the board in 2013, with more than 1,000 pounds per acre of cotton, 180 bushels of corn, 4,550 pounds of peanuts, and 37 bushels of soybeans, says Smith.
Corn continues to lead the markets, he adds, with oilseeds in second place. Predictions this year are for another boost in U.S. corn acreage.
“The U.S. increased soybean acreage by a little over two million to 77 million acres in 2012, notes Smith.
“Georgia bumped up to about 220,000 acres and Florida increased by about 17 percent to 21,000 acres. Georgia’s planted acres kept growing throughout the year, with some ultra-late beans being planted following corn.”
Record-high yields in Georgia compared to a third consecutive year of declining yields in the United States, he says.
“The last report raised the average U.S. soybean yield to 39.6 bushels per acre. That has created a somewhat tight situation again in soybean supplies.”
Better than originally thought
Harvested U.S. acres probably were better than originally thought considering the Midwest drought, says Smith.
“Some growers caught later rains that were too late for corn. The Delta region had big acreage increases and the Dakotas and Nebraska had large increases. The biggest shifts downward were in Indiana and Arkansas relative to what they usually grow.”
Growers in Southern states are expected to continue to increase their soybean acreage this year, says Smith.
“The U.S. yield trend, projected out to 2013, is expected to be more than 44 bushels per acre. The drought will have a continued impact based on projections, but we should see higher yields for this year,” he says.
Looking at overall supply and demand, in the last two years, U.S. production has been just over 3 billion bushels, falling slightly below total use. “High prices have worked our consumption down from a high of 3.36 billion bushels in 2009.
“So we’re still in a tight supply/demand situation going into 2013. Fundamentally, soybeans would appear to be stronger and more bullish. We need more soybeans this year to build up stocks.”
U.S. production has been raised to just more than 3 billion bushels, leaving a total supply of 3.2 billion bushels for this marketing year, says Smith.
Exports dropped slightly, but expectations are that when Brazil and Argentina complete their harvest, China will begin moving its purchases away from the U.S. and towards South America, he says.
“The major world exporters of soybeans are the United States, Argentina and Brazil. Brazil will pass us this year in terms of total exports.
“All of South America has been the largest exporter of soybeans for some time now. The major importers import about 86 million metric tons, with 63 million of that being imported by China.”
Instead of importing meal and oil like they once did, China has built a lot of crushing capacity, so they’ve become the largest crusher in the world, passing the U.S. in 2009-2010, says Smith.
China a big driver
“So we’ve seen a shift, with China now importing beans to keep its infrastructure going. China will continue to be the big driver in terms of global soybean demand. The U.S. is projected to get some export growth, but the major growth is expected to come from Brazil, our major competitor.”
Soybean prices have followed a “sideways” pattern since this past November, says Smith, but remain very good.
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“Considering what futures prices have done over the past four to five years, the basis is real tight, indicating a need for soybeans. We’ll probably stay in this sideways trend until we see what production numbers actually are from Brazil and Argentina.”
A large part of the U.S. remains in a drought, including parts of Georgia, says Smith, and the outlook is for continued dry conditions in the Southern Plains.
“Generally, with a drought such as we’ve seen in the Midwest this past year, we don’t see a total recovery in the next year. Right now, we see a projection for a persistent drought in the Midwest.
“The Corn Belt could be split this year in terms of moisture, with a disparity in the region itself if this drought continues. We still could be below trend-line yields, but I look for us to improve by a bushel or two over last year.”
Looking at cost and return comparisons, soybeans and corn are showing the highest returns over variable costs, compared to cotton and peanuts, says Smith. This would indicate a shift more of those crops this year, with cotton dropping slightly.
“Right now, we have a relatively tight supply, with China’s demand continuing to increase. Could we see an acreage battle with corn?
“In Georgia, I think we’ll push up to more than 400,000 acres in soybeans. I’m basing that on 2009, when were in a similar situation, with a large peanut crop and a recovery in corn and soybean prices.”
Winter seedings of wheat in Georgia are pegged at 410,000 acres, says Smith. “That would suggest we would at least bump up soybean acreage on double-cropping as well as on double-cropped cotton.
“In Florida, winter wheat seedings are at 20,000 acres. We’re not real short on wheat, but we’re short enough to have some price volatility this year.”
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