The neck-and-neck race between soybeans and corn for the title of No. 1 U.S. crop is over after one lap, with corn the victor and soybeans out of the running due to trade war with China. The USDA says corn will be the acreage king for years to come while soybeans recover slowly from the loss of sales to China, which used to buy one of every three bushels of U.S. soybeans.
Soybeans surpassed corn as the most widely planted crop this year for the first time since 1983 on expectation of steadily rising demand by China, the world’s largest soybean importer, and forecasts of a larger appetite for the oilseed in the rest of Asia, the Middle East and north Africa. U.S. growers are harvesting a record-large crop, but tit-for-tat tariffs will mean sharply lower exports this trade year — 10-percent smaller than were forecast before the trade war began in July.
Beginning with 2019, corn plantings will run 9-10 million acres ahead of soybeans through 2023, said USDA in its agricultural baseline released over the weekend, with corn plantings of around 92 or 93 million acres a year and soybeans at 82.5 to 84 million acres annually. The corn-v.-soybeans gap would close, somewhat, to 6 million acres in 2028, the last year included in the baseline.
Last winter, USDA analysts projected a marathon between the crops for the coming decade. Instead, corn will cruise with strong demand and lean stockpiles. The first 15-billion-bushel corn crop could be harvested in 2020, growing to 16 billion bushels in 2025, while soybean production may not approach this year’s level until 2027 or 2028. In contrast to a decline in corn stocks, the soybean “carry-over” at the end of this marketing year is forecast at a record 885 million bushels. The USDA baseline says it will take six years to work the stockpile down to its September 2017 size, for roughly 300 million bushels.
Corn prices are strengthening, suggesting it will be more remunerative than soybeans, where prices are expected to improve marginally for the 2019 crop, said the USDA baseline. Net returns over variable costs, such as seed, fertilizer and fuel, would be $344 an acre for corn and $273 an acre for soybeans based on expenses nationwide for the new crop. The USDA does not project fixed costs for crops, which include land payments and taxes.
Midwestern corn and soybean farmers will turn a profit this year, aided by higher-than-normal yields and Trump tariff payments from USDA, estimated two University of Illinois economists. Losses are likely in 2019 even with above-average yields. “When trend yields again occur, a great deal of financial stress will be felt in Illinois and across the Corn Belt more generally, particularly if there is no significant positive price response to those lower yields,” said economists Gary Schnitkey and Krista Swanson at the farmdoc Daily blog.
Conditions are likely to be more favorable in 2019 than in the following year, according to USDA’s macroeconomic assumptions. They call for 2.9 percent GDP growth, 2 percent inflation, low oil prices and 3.3 percent unemployment. GDP growth is expected to slow in 2020 and beyond, while inflation edges upward, crude oil prices rise and the jobless rate increases.
The USDA agricultural baseline is available here.