Visionary thinking, soybean checkoff contributes to soaring exports06/29/2017 | Soybean Exports, Soybean News, Economics
By Matthew Wilde, ISA senior writer
Farmers will find out Friday if soybean acres outnumber corn nationally.
Oilseed analyst John Baize of Falls Church, Virginia, told Iowa Soybean Association (ISA) leaders during a conference call Tuesday that may happen for the first in more than three decades. The U.S. Department of Agriculture (USDA) Acreage Report may confirm if more soybeans than corn were planted.
“If it happens, that will be pretty amazing,” he said. “Soybeans achieved this through (increasing) demand worldwide.”
The only time soybean acres surpassed corn was in 1983, according to the National Agricultural Statistics Service. Nearly 63.8 million acres of soybeans were planted that year compared to more than 60.2 million acres of corn. The Payment in Kind program gave farmers government-owned corn, among other commodities, in return for leaving a portion of their acres unplanted to reduce surpluses. Soybeans weren’t part of the program.
Baize, a nationally-known soybean analyst, provided a look at past and future soybean trends to the ISA Board. He said the work of current and past soy visionaries like Willard Latham, and the soybean checkoff allowed soybeans — once considered an alternative crop to corn, wheat, cotton and other small grain in the early 1900s — to grow into the nation’s most valuable ag export and possibly most planted crop.
The USDA Prospective Plantings Report estimated corn acres at 90 million this year, down 4 percent from last year. Soybeans are knocking at the door at 89.5 million acres. In 1964, corn acres more than doubled soybeans at nearly 69 million.
A big reason America’s most popular legume has gradually closed the acreage gap, especially the past decade, is skyrocketing demand worldwide and profit potential.
Since World War II, Baize said demand for soy oil and meal have increased dramatically. Domestic consumption remains strong, but exports are booming. China leads the way.
More than 1.9 billion bushels of U.S. soybeans were exported in 2015/16 worth nearly $25 billion, Baize said. Exports are expected to hit 2.25 billion in 2017/18, government reports indicate. In the ‘60s, exports were in the hundreds of millions of bushels.
“The soybean industry from day one has been focused on exports,” Baize said. “ASA (American Soybean Association) took the lead back in those days opening offices worldwide teaching firms how to process soybeans, refine oil and formulate feed,” among other things.
China is and will remain the predominant buyer, he continued. The world’s most populous nation didn’t become a net importer of soy until 1995. As the country’s economic might and middle class grew, so did its appetite for protein.
Baize said China will buy more than 62 percent of the world’s soybeans and nearly 58 percent of the U.S. crop. In 2015/16, U.S. exports to China amounted to 1.1 billion bushels, up 10 percent from the previous year.
“We’re doing very well there,” Baize said.
Good demand, rising yields and soy prices routinely hitting double digits a few years ago, including $16 per bushel, led to more production worldwide. Now supplies are overwhelming good demand.
ISA Board member Lindsay Greiner of Keota asked Baize to peer into his crystal ball to predict soybean prices for this year’s crop.
Record U.S. soybean plantings, barring weather problems, will add to the problem, Baize said. Cash prices in the $8-per-bushel range, possibly high $7s, aren’t of the question.
“A lot of farmers hedged and booked soybeans early for higher prices. The problem will be next year, Baize said.
“We’re not expanding domestic demand much. Biodiesel is the exception,” he added. “We will have to continue to expand exports to have profitable prices.”
There’s hope on that front, the soybean expert said.
More and more soybeans are being exported from the West Coast to Asia, especially China. If there’s a problem with shipping soybeans from South America, he said buyers know than can “fill the gap” by booking a panamax ship full of beans from West Coast ports.
Baize expects India, the second most populous nation, to be a soybean meal importer in the next 3-4 years.
“We should do very well in that market,” he said. Bangladesh and Pakistan are also forecasted as growing markets for soybeans.
Government data shows net soybean sales of 312,400 metric tons or nearly 11.5 million bushels were up noticeably from the previous week and up 2 percent from the prior four-week average. Increases were reported for Bangladesh, among other countries, at 110,000 metric tons or a little more than 4 million bushels.
Despite current prices, Brian Kemp of Sibley is optimistic about the future. The former ISA President and current ASA Board member said agriculture prices are cyclical and the prospects of export growth is promising.
He’s also encouraged by the growing acceptance of high oleic soybeans to capture more premiums and market share.
“You have to look at the long view,” Kemp said. “We have new technologies and soybeans to distinguish the U.S. in the market place. Plus, something will happen somewhere and the price picture could change quickly.”
ISA Board member Suzanne Shirbroun of Farmersburg is cautiously optimistic. Price and profitability will factor in her future acreage decisions.
“It’s going to really make me think about planting and acres next year,” Shirbroun said.
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