Even though soybean acreage projections came in slightly lower than many had predicted, USDA’s Prospective Planting report showed an increase of 10 percent over last year.
Soybean acreage for 2020 is estimated at 83.5 million acres, which was toward the low end of pre-report expectations. But that’s still up 10 percent from a year ago.
“We did have a lot of (prevented plant acres) last year, so it wasn’t a total surprise, it was kind of expected,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn.
“When we look at soybean acreage, we are within the range (of early estimates),” she continued. “It’s a little bit lower than what the market had anticipated. Early estimates were for a little over 84 million acres, so they came out just a little bit under that.”
Compared to last year, planting intentions are up or unchanged in 22 of the 29 reporting states, with large increases anticipated in Arkansas, Illinois, Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio and South Dakota, according to the USDA report.
Private estimates have 2020 soybean acres at around 85 million acres, which would represent a five million acre increase in soybean plantings.
If producers do match this estimate it would be the third largest soybean planted acreage on record.
“Keep in mind, with these acreage numbers we’ve set the bar now. It’s the market’s job to adjust,” Jensen said. “It’s been fun to meet with farmers this winter and they’ve been angry about how ‘we planted more corn last year in June because prices were so high, now look at what it’s worth.’ Well, yeah, that was the market’s job, to convince you to keep planting acres into June. So this is the market’s job now. We set the bar for corn and soybean acres and it’s the market’s job to make adjustments to that with prices over the next two months,” she added.
Local prices for beans have actually “hung in there pretty decent” with cash prices around $8. The basis, she noted, is respectable, not good, but respectable.
At one local elevator in west central Minnesota regularly followed in this column, as of March 31, the cash price for soybeans was $8.30 and basis was -55 cents under. September 2020 cash price was listed at $8 and basis was -80 cents under.
One thing Jensen wants to emphasize for soybeans and for farmers to look at right now is the futures market.
“This fall, assuming you don’t have storage for everything, the soybean market is inverted, meaning November futures are currently 25 cents higher than March,” she said. “So the soybean market wants you to deliver those soybeans off the combine. It does not want you to put it into the bin. You’re actually getting 25 cents more if you deliver those soybeans right off the combine.
“Now, of course, we have basis and a few other things, but the market wants those beans off the combine. So if you do want to get cash early, if you don’t have the storage, you probably want to look at trying to price soybeans for delivery right off the combine,” she added.
The one non-soybean factor that’s been impacting all the markets is the coronavirus. Like other markets, soybean prices initially “took a huge dive” right after the coronavirus hit. When the stock market crashed, the soybean market went right along with that.
“Nearby futures went down to $8.21, and it followed the stock market pretty closely. But now we’ve rallied 60 cents,” she said. “The market has come back some. We’ve realized there’s still pretty good demand for soybeans.
“There was a bit of a panic there for the soybean market, I’m not going to lie, but the market has recovered some in the past week and a half and it looks much better now,” she added. “The soybean market has really had some good days. They’re trying to make sure that farmers are incentivized about planting soybeans this spring. They want you guys out planting soybeans and they want you to deliver them off the combine.”
On the demand side, Jensen said the U.S. is actually doing pretty well with export sales. One reason for that, she explained, is that this is the time of year when South America typically is taking over the market, but that’s not happening this year.
“We hear a lot of stories about port strikes, that they just don’t have the logistics,” she said. “The U.S. is still one of the places where you want to go for a reliable source of good soybeans, so soybean sales are hanging in there.
“It’s a bit of a surprise. We thought we were going to drop off and they’re doing okay,” she added. “We’re not where we were a year ago, but we’re doing okay.”
In the coming weeks the market will be watching the weather and how soon producers are able to start planting. Conditions last fall were wet across a wide region and there are still some crops standing in the fields, mostly corn, so there are still some challenges for producers before planting begins in earnest. But there is some optimism.
“We have corn (acreage) up 8 percent and we have soybeans up 10 percent. Soybeans were not nearly as bearish as what the corn market was,” Jensen said. “So there is hope out there for the soybean market, that maybe we can get a little better basis, a little better bump in the futures price. Soybeans look much better than corn at this time.”