TOP OF THE HEAP: Soybeans Get The Early Nod .. But Corn Could Make Comeback
It’s been almost three decades, but Steve Guy still remembers the days when farmers came from miles around to unload their soybean harvest at the grain bins just north of Selma off U.S. 80.”In the fall of the year, there’d be trucks lined up as far as you could see along Highway 80 waiting to unload their soybeans,” recalled Guy, director of the Alabama Farmers Federation’s Soybean Division. “And it went from being that busy to those bins being completely shut down and mothballed.”But what goes around comes around, and with soybeans fetching record-high prices, the bins are back and beans appear to again be the commodity of choice according to the USDA’s spring planting intentions report.The USDA survey released March 31 projected soybean acreage to rise 18 percent nationwide this season with 6.3 million acres. In Alabama, it’s an even bigger jump with soybean acreage projected to increase by 84 percent to 350,000 acres, while corn — last season’s hope — plunged 29 percent to just 240,000 acres.Peanuts, up 16 percent nationwide, are up 13 percent in Alabama with 180,000 acres in production, largely due to the 2007 crop fetching its highest price in five years. Cotton, the one-time king, beaten down by corn last year, is projected to experience another decline, falling 25 percent to 300,000 acres — the least since 1983.Oats acreage is expected to rise by 10,000 acres, an 11 percent increase over last season. Sweet potatoes are also expected to increase, up 8 percent to 2,700 acres.Still, the question everyone seems to be asking is “Could ‘beans be the commodity that saves the farm in 2008?” That remains to be seen, and may depend as much on uncertain futures markets and farm bill spending limits as it does on soaring input costs and unforgiving weather.”By the time the spring planting data comes out, it’s a little outdated, but it’s all we have to go by,” said Perry Mobley, director of the Federation’s Hay & Forage and Beef Divisions. “Everybody is anticipating the report and what it’ll say, but by the time it came out, soybeans had started to see a downturn in the market. If beans get below $10, that again favors corn planting, and we could actually see more acres of corn planted than what was originally projected.”Mobley is right. A day after the release of the spring plantings report, May beans on the Chicago Board of Trade fell the exchange-imposed limit of 70 cents, or 5.5 percent, to $11.98 a bushel. Meanwhile, corn rose 6.75 cents to $5.67 a bushel after setting an all-time high of $5.88. A day later, on April 2, the CBOT’s May corn rose to $5.96.There are other signs too that this newfound fervor over soybeans may be short-lived. For one thing, while 350,000 acres in soybeans is the most since 1997, it’s only a fraction of the 1979 record when Alabama farmers planted 2.15 million acres in soybeans.At that time, soybeans cost between $92 and $111 per acre to produce and fetched roughly $6.10 per bushel, said Max Runge, an Extension economist with Auburn University. Today, Runge said, beans are commanding about $12 a bushel while input is averaging $310 per acre. So while the input costs for beans have more than tripled, the market price has only doubled.Furthermore, the ebb and flow of the commodities market is unpredictable at best.”The drop (in soybean prices) probably started in 1980,” said Guy, “but the rate of drop really increased along about the mid 1980s – ’83, ’84, ’85. And you have to remember, money was easy to get then – you had Farmers Home Administration, which we don’t have anymore. So a farmer could go out and just borrow government money. Then, the 1980 Russian grain embargo by the Carter administration also had a devastating impact on soybean prices. Yields started going down, and the farmers started getting behind on their payments so they’d go out and borrow more money. A common phrase heard a lot back then was ‘You can’t borrow yourself out of debt.’ But a lot of farmers tried, and the FHA started calling in loans, and a lot of them couldn’t pay. A lot of good farmers lost their farms, a lot of acreage. So it started snowballing in the 1980s, and in 1985, they came in with the Conservation Reserve Program (CRP), and a lot of people started putting a lot of that land that was in soybeans into CRP.”Guy said it’s unlikely that farmers will ever again rely so heavily on a single crop. “Most farmers are fairly well diversified now, and they’re going to have some corn, some soybeans, and a lot of them are going to double crop,” said Guy. “If they’ve got irrigation, a lot of them will put corn on the irrigation and put beans on their dry land because it’s not nearly as expensive to plant beans as it is to plant corn or cotton.”The USDA will take another look in June to determine the actual acreage devoted to which crops. Until then, Alabama farmers’ planting intentions appeared to be mostly in line with their peers across the nation.Behind soybeans, the largest increase comes in winter wheat, which is up only 4 percent nationwide, but up by 67 percent in Alabama where an estimated 200,000 acres are nearing their May-June harvest, thanks largely to high prices and short supply.Buddy Adamson, director of the Federation’s Wheat & Feed Grain and Cotton Divisions, said that many farmers planted soft red wheat last fall in anticipation of double cropping with soybeans later this month.”Ninety-nine percent of any double crop is going to be soybean planted,” said Adamson. “They used to do a lot of that back in the 1970s when wheat and beans were a better price, before beans went south and wheat got to where it wasn’t as profitable. But since both of those crops have come back up in price, you’ll see more of it this year. And because fertilizer is so high, they’ll fertilize that wheat and not put anything down for soybeans… It’s almost a free ride for soybeans.”However, Adamson said, farmers could face a shortage of suitable storage facilities by early June when the last of the spring wheat is harvested.”Wheat doesn’t characteristically store too well in the Southeast due to insect infestation,” Adamson said. “Those who have storage will try to store it and move it with the market, but they don’t want to have wheat in the bin when it comes time to harvest corn or soybeans.””They say the carryover of wheat is the lowest it’s been in quite sometime so it’s going to keep driving demand,” said Andy Wendland, president of the Autauga County Farmers Federation, who has 600 acres of soft red wheat.”It can be a little lower input crop than row crops, but to get to the yields you need, you have to manage it and treat it like you would any other row crop. Typically, that hasn’t always been done. But with prices like they are, people are managing it a lot closer to get the maximum yields.”Even so, wheat is no sure thing, either. Upon release of the plantings report, May wheat fell 60 cents, or 6.1 percent, to $9.29. Just a month earlier, wheat had reached an all-time high of $13.50 a bushel.However disconcerting, such market fluctuations may be the only thing farmers are able to count on this season.