A year after making soybeans the most widely grown crop in the country, U.S. farmers will make corn king again, driven by trade war with China and a burdensome soy stockpile, said the FAPRI think tank at the University of Missouri. “China’s tariffs will reduce U.S. soybean exports,” said FAPRI. The research group expects farmers will slash soybean plantings by 5.5 percent in 2019 in the face of the lowest market price in 12 years.
Corn and wheat will benefit the most from soybean’s downfall, with plantings up by roughly 2 million acres apiece in 2019 while soybean loses 4.6 million acres. Early this year, the USDA projected a neck-and-neck race for dominance between corn, the longtime leader, and soybeans, boosted by strong Chinese demand.
In a “baseline update” issued over the weekend, FAPRI said the contest is over, with corn the clear winner for the next five years. Corn plantings will top 92 million acres a year in most cases while soybeans never reach 86 million acres. By comparison, growers planted 89.6 million acres of soybeans and 89.1 million acres of corn this year, the first time since 1983 that soybeans exceeded corn in acreage.
China is the world’s largest soybean importer and in recent years, purchased the equivalent of one of every three rows of U.S. soybeans. Exports have run above 2 billion bushels a year recently and will stagnate at that level in the near term instead of continuing to grow.In the 2021/22 marketing year, exports would be 200 million bushels, or 9 percent, smaller than FAPRI projected in March.
When the White House put high tariffs on imports of steel and aluminum, Beijing responded with stiff duties on U.S. agricultural exports and other products. Soybeans are the largest U.S. ag exports to China, worth $12 billion last year. The lion’s share of the Trump tariff payments announced a week ago will go to soybean growers. The USDA says ag sales to China will fall by 55 percent in the year ahead, dropping China from first place among export customers to No 3.
Meanwhile, U.S. soybean stockpiles would remain swollen by a string of bumper crops, with a record harvest of 4.586 billion bushels forecast this fall by USDA. The so-called carryover, the amount of soybeans in storage at the start of harvest, was a scant 92 million bushels in fall 2014. It was forecast at 430 million bushels at the start of this month, soaring to 785 million bushels, the largest ever, when the 2019 crop is ready for harvest. The season-average price for this year’s soybeans will be $8.73 a bushel, said FAPRI, the lowest since the 2006 crop and down from its spring forecast of $9.38 a bushel. Farm-gate prices will be depressed through 2023/24, it said.
“Trade disputes and the expectation of high U.S. corn and soybean yields are weighing on the prices of many agricultural commodities,” said the FAPRI update. “Consumer food-price inflation increases to 1.8 percent in 2018, as the index of prices for food consumed at home increases for the first time in three years.”
For 2019, FAPRI projected soybean plantings of 85 million acres, corn at 91.1 million acres, wheat at 50.1 million acres, upland cotton at 12.9 million acres and rice at 2.77 million acres. Those are the five largest U.S. crops and accounted for three-quarters of the two dozen “principal” U.S. crops this year, according to USDA data.