Farmers who have been delayed in planting corn could take advantage of a market rally in soybeans and switch to that crop, Purdue agricultural economist Chris Hurt says.
Soybean prices surged Tuesday (May 10) after a USDA report showed a sharp reduction in global soybean inventories and stronger-than-anticipated demand for U.S. exports.
"Delayed planting this spring may actually turn out to be a financial blessing if farmers end up planting more soybean acres," Hurt said. "Soybean prices have been rising rapidly this spring while corn prices have increased much more slowly."
Since March 1, soybean prices have risen 25 percent, or $2.20 per bushel, while corn prices are up only 4 percent, or about 14¢ per bushel.
"Given prospects for high-priced soybeans and low-priced corn, the financial incentive to shift intended corn acres to soybeans has reached new highs," Hurt said.
Based on crop budgets projected by Purdue agricultural economists, soybean farmers stand to earn $116 more per acre than corn producers this year.
"This is one of the highest incentives to shift from one crop to another we have ever seen," Hurt said.
Soybean prices have been moving steadily higher since January, buoyed by a weaker U.S. dollar, which triggered unexpectedly high demand from China, the largest export market for U.S. beans. A weaker dollar makes U.S. exports cheaper for foreign buyers.
The rally accelerated late last month when heavy rains threatened to delay the harvest in some regions of Argentina, the world's third-largest soybean producer.
Tuesday's release of the USDA's World Agricultural Supply and Demand report sparked a renewed wave of buying. July soybean futures prices rose more than 57¢ on the day to close at $10.84 after falling as low as $8.59 last November.
July corn futures were up 12¢ Tuesday to settle at $3.81, still below the psychologically important $4 level. Corn prices have been held back in part by last month's USDA Prospective Plantings report showing farmers intended to plant more corn acres than analysts expected.
Since that report was issued, there have been indications that farmers across the country could shift up to 3 million acres from corn, with most of that acreage expected to go to soybeans, Hurt said.
"This shift will have a tendency to bring high soybean prices and low corn prices back into better alignment," he said. "Ultimately, farmers in states like Indiana, Michigan and Ohio that have fallen behind on corn planting may benefit financially if they shift some of that acreage to soybeans."