U.S. soybean farmers looking for a South American Asian soybean rust disaster might be waiting for a while. While soybean rust is spreading in Brazil, farmers there seem to have it under control in commercial fields.
Something drastic would have to happen to yields in South America to push significant acres away from soybeans and affect prices positively in the U.S. as growers and markets weigh the threat of Asian soybean rust, said a top marketing expert.
“I think we'll see some acreage shifts in the United States, but not as much as anticipated,” said marketing expert Richard Brock, who spoke to a group of North Carolina soybean, corn and wheat farmers at a recent conference.
“Rust has been identified in a number of areas in Brazil, but that whole industry down there has it pretty well under control. I don't see any significant cuts in yield in Brazil.”
In the United States, “I would be quick to point out that we're going to see a significant increase in soybean acres in the Dakotas because cash rent and land is cheap and the risk of rust up there is very, very slim,” said the author of the Brock Report.
Because cold weather kills the fungus that causes soybean rust, experts anticipate soybean rust first occurring in the South rather than the North, Brock noted. He expects farmers in the North to pick up some soybean acres leaving the South because of the threat of soybean rust.
In mid-January Brock foresaw about 1.5 million acres leaving soybeans for corn. He anticipated 73.6 million being planted to soybeans in 2005; 82.5 million acres to corn. “Another 1 million acres here or there isn't going to make much of a difference due to the larger supplies of both soybeans and corn.”
Experts indicate that some of the soybean acres in the South will go to cotton this season. For example, North Carolina could see a 5 percent increase in cotton acres.
U.S. farmers produced 3.14 billion bushels of soybeans in 2004, the largest crop ever. Currently, the United States has the “largest supply of soybeans on farm that we've ever had in history.” That indicates “a lot of people are hoping for rust problems someplace.”
In the absence of major outbreaks of soybean rust affecting yields in commercial soybean fields in South America in February, pressure on acreage issues should lessen and the focus would return price. “If there are no major outbreaks in Brazil, you'll see farmers more concerned about price and we've got the risk of it unraveling,” Brock said. “I can't plan a marketing program hoping Brazil disintegrates.”
The highest level of risk exists in the South, primarily Louisiana and Mississippi. “They're waiting for it, so it's not going to catch anybody by surprise.”
The problem will be the cost of control. “It's controllable, but it's going to be expensive. You're talking roughly $25 an acre to treat this and sometimes it takes three treatments. As a farmer, I have to ask myself, ‘What happens to the market if we don't have a problem with rust and it's under control?’ If there's no problem, this thing is in big trouble. You do not build a marketing plan on the (basis) of: What happens if it doesn't rain? You build a marketing plan based on what if it does.”
Brock told the farmers in North Carolina that the lack of soybean rust problems could send the markets down 80 cents per bushel.