Missouri's agricultural outlook: more beans, less corn in 2008

Biofuels keep demand, prices high
Wednesday, March 5, 2008 | 7:12 p.m. CST; updated 2:56 p.m. CDT, Tuesday, July 22, 2008

COLUMBIA — Two Missouri commodity groups said they anticipate Missouri farmers will plant more soybeans and less corn this year, reflecting national projections released Wednesday by an agricultural policy group based at MU.

Gary Marshall, executive director of the Missouri Corn Growers Association, said Missouri traditionally grows more acres of soybeans than corn. The last three or four years have shifted toward growing corn, but this year corn acreage will decrease, Marshall said.

Corn and soybeans, Missouri’s two main crops, are being tapped for the production of ethanol and biodiesel, two alternative fuels that are keeping commodity prices high because they’re changing supply and demand.

In a Wednesday morning teleconference, livestock analyst Scott Brown of the Food and Agricultural Policy Research Institute said that “in an overall summary of the issues, it’s hard to say anything without including the biofuel arena.”

The Columbia-based research institute that analyzes farm policy released its annual report to the U.S. Congress on Wednesday. It anticipates grain prices remaining high, which benefits corn and soybean farmers but will continue to contribute to high feed costs for livestock producers.

“Agricultural market outlooks appear more uncertain than in past years,” Pat Westhoff, co-director of the policy research institute, said in an accompanying news release. “Petroleum prices and biofuel policies drive most of the changes.”

Ethanol demand nearly doubled between 2005 and 2007, helping to drive U.S. corn acreage to its highest level since World War II, according to the institute’s report.

Brown said that overall acreage planted with corn and soybeans in the U.S. is expected to increase by 4 million acres, often from the conversion of pasture land.

This year, corn will “battle for acres” with soybeans and wheat, Westhoff said.

“We’ve seen projections thinking that, nationally, more soybeans will be planted this year and certainly that’s likely here in Missouri,” said Adam Buckallew, a spokesman for the Missouri Soybean Association.

The institute expects a 6 million-acre increase in soybeans and a 2 million acre decrease in corn nationwide. Rising production of biodiesel also will increase the international and domestic demand for vegetable oils made from soybeans.

“Prices of soybeans have gone up, and there’s been a surge in the price of wheat,” Buckallew said. “One thing I’ve heard from a lot of farmers here is they plan to plant wheat in the spring and follow with a double crop of soybeans. It’s kind of an opportunity to have two different crops in those fields instead just one.”

A drought in Australia spoiled its wheat crop, causing U.S. exports of wheat to rise. The institute expects wheat prices to fall, but remain higher than they were in 2006.

The drawback of growing a double crop of wheat followed by soybeans is soybean yields usually aren’t as high because they are planted later in the season. But Buckallew said as long as the price of soybeans remains high, a lot of farmers will choose to just plant soybeans in the spring.

“It all kind of balances out, I think,” he said.

There’s also a balancing act between corn and soybeans.

Buckallew said a lot of farmers keep crop rotation in mind when deciding what to plant. Last year’s record corn crop sets the stage for a larger soybean planting to replenish amounts of nitrogen in the soil, he said.

He also said that soybeans are cheaper to grow because they need fewer inputs.

Marshall of the Corn Growers Association said he expects the corn acreage to go down, but not much. Strong worldwide demand from developing countries such as China and India and domestic demand for ethanol will keep corn profitable, he said.

“I think FAPRI’s right, and we’ll continue to see strong commodity prices across the board,” Marshall said. “I think we’re going to see farmers in the Midwest continue to plant significant corn and bean acres.”

He said two new ethanol plants, including one in Carrollton that is expected to open in May, will keep the corn market growing.

“I think the ethanol industry can expand beyond that because we have a surplus of corn here,” Marshall said.

Brown said the institute will continue to watch commodities carefully “as acreages may substantially change given price changes.”

“Projecting future prices was uncertain in the best of times,” Brown said. “We assume average weather in the baseline; however, a drought in any year when grain stocks are tight would change everything.”

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