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Focus now on weather, China in U.S. grain markets

Article cover photo
Iowa farmers are expected to plant 9.4 million acres to soybeans this year, down 6 percent from last year, the USDA’s report said. (Photo Credit: Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

More of Iowa is expected to be planted to corn this year, the U.S. Department of Agriculture (USDA) said in today’s prospective plantings report. The report said 13.6 million acres are projected to be planted with corn, up 3 percent from 2018. Iowa farmers are expected to plant 9.4 million acres to soybeans this year, down 6 percent from last year, the USDA’s report said.

U.S. crop production is expected to mirror this change, the report said. U.S. corn acreage is projected higher at 92.8 million acres, up 4 percent from 2018. Acres planted to soybeans in the United States—at 84.6 million acres—is down 5 percent from 2018, the report said.

The May soybean price was down a nickel at the close of the market to $8.83 per bushel. May corn prices took a 17-cent hit, closing at $3.56 per bushel.

Wildcards in play

The report is just a projection, though, said Pat Swanson, district 9 director for the Iowa Soybean Association (ISA).

“While these reports are helpful, I think the fact that soybean acres are down is due largely to the fact that farmers are staying with their crop rotation,” said Swanson, a farmer and crop insurance agent from Ottumwa. “If we have a wet spring which pushes corn planting past the May 31 (crop insurance) planting date, more acres will be planted to soybeans.”

ISA District 8 Director Randy Miller said he’ll be planting more acres to corn this year due to his crop rotation.

“It’s just that way for me this year,” said Miller, a crop and livestock farmer in Lacona. “I don’t have a true 50-50 corn-soybean acre split. I suspect there are other farmers in Iowa and in the United States who have more corn acres this year, too. It’s part of a normal rotation.”

Weather—especially recent flooding in western Iowa and eastern Nebraska—wasn’t factored into the report, and remains a wildcard, ISA CEO Kirk Leeds noted.

“The reality is that the world has changed quite a bit since March 1, especially when it comes to weather,” Leeds said.

That makes him leery of the report and the USDA’s prospects for the U.S. soybean crop.

“Nobody really knows what the weather is going to do, and the weight of uncertainty as it relates to China continues to be the story,” Leeds said.

There’s still uncertainty regarding a resolution to a trade deal with China. In addition, it’s still largely unknown how much of an impact the African swine fever has had on China’s pig farms. An ISA farmer delegation is currently in China, learning of the potential market opportunities. A trade deal seems to be on the horizon, U.S. Ambassador to China and former Iowa governor Terry Branstad told the farmers in Beijing.

Grain stocks

The United States is still looking at a mountain of soybeans in its inventory, the report showed. The USDA’s grain stocks report, also issued today, showed a 29 percent increase in U.S. soybean stocks from March 1, 2018.  The USDA reported 2.72 billion bushels of soybeans stored in all positions as of March 1, 2019. This reflects the absence of China as a main market, said Cory Bratland, chief grain strategist and commodity broker for Kluis Commodity Advisors.

“It’s the China factor,” he said. “Normally we like to sell them about 30 to 35 million metric tons (of soybeans) to China, and we’ve only sold them about 20 million so far.”

He added that African swine fever, which has decimated China’s pig herd, has decreased demand for U.S. soybeans.

A trade deal could help sell off the mountain of soybeans waiting for a market in the United States, he said.

“We need to get a trade deal done with China and hopefully see it (sales) pick up some. The marketing year ends at the end of August, so we’re running out of days to get this sold.”

There were 990 million bushels of soybeans stored on-farm in Iowa as of March 1, the USDA’s report showed. That was down 131.3 million bushels from March 1, 2018.

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