U.S. Farmers Opt For Soy To Limit Their Losses

Planting more soy at a time of sputtering demand from importers and domestic processors will only serve to drive prices lower, further swell historically large global supplies, and erode US farm incomes.

Fertilizer costs are down from highs last year, but crop prices are also down, while land costs remain elevated and borrowing rates for operating loans and equipment have jumped. I Photo: U.S. Climate Resilience Tool Kit / Wikimedia Commons

To begin with, the aforementioned are already poised for the steepest annual drop ever in dollar terms, Karl Plume reported for Reuters.

In March, the US Department of Agriculture forecast farmers would plant 86.5 million acres of soybeans nationwide this spring, the fifth most ever. Some analysts expect soybean acres to increase by another million acres or more as heavy rains close the window on corn planting.

University of Illinois agricultural economists projected negative average farmer returns in the state for both crops, though losses would be smaller for soybeans.

In northern Illinois, farmers could lose $140 per acre on average for corn and $30 per acre for soybeans with autumn delivery prices of $4.50 and $11.50 a bushel, respectively, the analysis showed.

Actual returns vary significantly from farm to farm, however, depending on factors like crop yields, the timing of grain sales, and whether farmers own or rent their land.

Fertilizer costs are down from highs last year, but crop prices are also down, while land costs remain elevated and borrowing rates for operating loans and equipment have jumped, likely forcing farmers to cut expenses.

When looking to cut costs, farmers often favor planting soybeans rather than corn because they require less fertilizer and pesticides, and seed costs tend to be lower.

An early spring forecast from the USDA projected soy plantings would expand by 3.5% this year, while corn plantings were expected to shrink by 4.9%.