Milling & Baking News - March 13, 2018 - 26

Ingredient Market Roundtable

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King soy? Top crop by area in
2018 likely to be soybeans

ing Corn's crown, while intact,
stands to lose some luster, according to recent forecasts from
the U.S. Department of Agriculture.
Annual corn production in the United
States in the coming year and the next
several years will far exceed that of
any other major grain or oilseed. Corn
yields simply are much greater than
those forecast or currently possible for
wheat or soybeans. But farmers will
vote for the crop they prefer to grow
this spring with their planters, and as
they do, the U.S.D.A. expects them, for
the first time, to plant as many acres to
soybeans as to corn.
The U.S.D.A. in its Grains and Oilseeds Outlook, prepared for and released at the U.S.D.A. Agricultural
Outlook Forum in Washington on Feb.
23, forecast areas planted to corn and
soybeans for harvest this year at 90
million acres each.
And that may be just the beginning. According to the U.S.D.A. Agricultural Projections to 2027 issued
in February, soybean planted acreage
was projected to eclipse corn planted
area in 2019 and remain larger in each
successive year of the 10-year projection period.
Corn planted area was forecast at
90 million acres in 2019, the same as
the forecast for the current year, but
soybean planted area in 2019 was
26 / March 13, 2018

Milling & Baking News

projected to expand to 91 million
acres. Soybean planted area was projected to expand further to 91.5 million acres in 2020 and to 92 million
acres in 2021, 2022, and 2023, before
leveling off at 91.5 million acres from
2024 to 2027.
In contrast, corn planted area was
forecast to be in a downtrend from 90
million acres in both 2019 and 2020
and then declining incrementally to
87.5 million acres in 2027. At the end of
the 10-year outlook, 2027, the U.S.D.A.
forecast there will be 4 million more
acres planted to soybeans than to corn.
Brian Harris, an owner and chief
financial officer at Global Risk Management, agreed with the long-range
outlook calling for soybean planted
area to eclipse corn area in the next 10
years and even suggested that 2018,
not 2019, will be the year soybeans
overtake corn.
"I think the number the U.S.D.A.
has plugged in for this year may be a
bit light," Mr. Harris said. "The number we're using in-house for soybean
planted area in 2018 is 92.6 million
acres."
Mr. Harris pointed out that area
planted to soybeans has increased
about 20%, from 75 million acres in
2011 to 90 million in 2017. He expected
continued growth in soybean planting
in the next 10 years, but not at such

a frenetic pace as in 2011-17, perhaps
more in the area of a half-per cent
to 1.5% a year. Mr. Harris said there
were two principal reasons for steady
growth in soybean plantings: China
demand and biodiesel.
"China is not going away," Mr. Harris said. "If anything, as incomes in
China increase and the middle class
there expands, China's demand base
for soybeans will continue to grow."
Mr. Harris said while there was a
lot of confusion, even consternation,
in the market regarding Renewable
Fuel Standard policy, "I think it's
clear, when you look around Europe
and the United States, biodiesel is not
going away." He acknowledged there
may be some tweaking of the R.F.S.
program, but he expected biodiesel to
continue to be a strong demand base
that will help offset demand losses
seen in other areas, such as food and
industrial use.
Paul Meyers, vice-president, commodity analysis, Foresight Commodities, Inc., took issue with the U.S.D.A.
corn and soybean plantings forecasts
for 2018. Mr. Meyers said he expected farmers to plant more corn than
soybeans in 2018, about 91.5 million
acres to corn versus 89 million acres
to soybeans. Mr. Meyers acknowledged the current soybean-corn price
ratio of 2.6 (in favor of soybeans)
bakingbusiness.com / world-grain.com

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Milling & Baking News - March 13, 2018

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