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A key question in commodity markets, says John Anderson, American Farm Bureau Federation deputy chief economist, is, “What’s soybean acreage going to be in 2014?" But, he says, the even more relevant question is, "How many acres will corn give up, and to what extent will Corn Belt farmers shift away from corn and back to beans?"
MAX ANDERSON, from left, Decatur, Miss.; Quinton Mills, Forrest, Miss.; and Shelby Beason, Philadelphia, Miss., were among those attending the annual meeting of the Mississippi Farm Bureau Federation.
Lower corn prices from this year’s huge crop are expected to encourage acreage switching to soybeans in 2014 and, says John Anderson, “It looks like soybeans will be driving the train in terms of what’s going on in the markets for a year or year and a half.
“The corn supply situation will get a little less supportive, and soybeans will continue to be where support in the market is,” he said at the annual meeting of the Mississippi Farm Bureau Federation.
Anderson, who is deputy chief economist for the American Farm Bureau Federation in Washington, says, “I think that’s the most realistic scenario — but there are a lot of possibilities and a lot of analysts speculating about the outlook.”
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A key question, he says, is “What’s soybean acreage going to be next year? But, the even more relevant question is, how many acres will corn give up? To what extent will Corn Belt farmers shift away from corn and back to beans?
“There has been a lot of corn after corn, and even some corn after corn after corn. Is the situation now such that a lot of these farmers will shift back to beans? And how big an acreage shift do we need?
“I think we do need a pretty substantial acreage shift to relieve the building supply pressure on the corn market. If we want to see support return for corn prices, there needs to be a move away from corn acres.
“How big will that move be? I personally don’t think it’ll be very big. With some of the investments farmers have made in on-farm storage, and particularly with some of the really big land rents that have been locked in, it’s going to be tough for them to move away from that high revenue crop.”
As a hypothetical example, Anderson says, “Let’s say we move 3 million acres out of corn, compared to what we planted this year, and we add another couple of million acres of beans (which would be a big number), and add a little acreage to wheat, for a total of 229 million acres of corn, beans, and wheat.
“What would that do to the supply situation? With those kinds of acreage changes, we could see corn stocks-to-use go up another 1.5 percent, even with some growth in use. We’d see beans essentially holding steady, or increasing a little bit, creating room for a little more use.
“These are certainly doable situations in terms of acres. But the supply situation wouldn’t change a lot, and arguably could get a little less supportive than it is now, particularly for corn. There is room for this kind of supply situation to get at least a little more bearish over the next year.
“The big question,” Anderson says: “Will corn drop by as much as 3 million acres? If it hadn’t been for the early season problems and prevented plantings this year, we probably would’ve had 97 million acres. Could we go from 97 million planned acres for 2013 to 92 million in 2014? That’s a big change, and given the friction in the market, I think it’s a bigger change than we’ll see.
“It’s not an unrealistic example, but I’d be surprised if corn drops that much and beans go up that much.”