There had been growing concern over the soybean meal supply, until a strong crop last year bolstered supplies. However, peace of mind may be short-lived with Asian soybean rust in the United States presenting a new challenge to the soybean supply.

Rust is a fungus that can reduce soybean yields by up to 80 percent if left untreated. Last summer’s active hurricane season delivered the rust spores to U.S. shores. It was first discovered in the United States on a Louisiana State University research farm last November. Since that time it has spread to parts of nine states. (See map.)

Since most of the states are in the South, which has only 14 percent of the soybean acreage, and harvest had generally been completed, the impact on 2004 national average yields  was minimal. But 2005 could be different.

“In general, a 12 percent to 15 percent decline in yields would cause a sharp increase in soybean and soybean meal prices,” says Bob Wisner, Iowa State University agricultural economist. “Expect soybean meal prices to hover around last year’s levels — about $200 per ton for 48 percent meal in Decauter, Ill., if that happens.”

Eight fungicides are approved to treat soybean rust, which could limit its negative effect.

“Treatments can be very effective, if they are applied early with thorough coverage and proper application rates,” says Darrell Good, University of Illinois, agricultural economist.

Whatever impact rust has, it won’t be immediate. That’s because soybean carryover stocks are expected to be around 460 million bushels on Aug. 31, 2005, says Wisner. That represents an eight-week supply, which is nearly four times larger than last year’s Aug. 31 carryover. The current supply is the largest carryover since the mid 1980s, says Good.

“Certainly short supplies will not be an issue this year. There’s no way of knowing about next year,” says Wisner. “A normal soybean crop is 2.92 million bushels. If soybean rust drops the crop by 12 percent, it could apply pressure to reduce soybean use so the United States doesn’t run out.”

Some farmers might be hesitant to plant soybeans with the threat of soybean rust looming, especially in the South. Wisner says some of the approximate 10 million soybean acres in the South might shift to cotton. Chris Hurt, Purdue University agricultural economist says national soybean acreage might fall 3 percent to 5 percent simply because growers will try to avoid rust.

“There will probably be some impact on soybean acreage,” says Good. “Some farmers have been putting more corn into their crop rotations, and soybean rust could accelerate that trend.”

Those trends could spill into the Midwest as well. Crop producers there could decide to hedge their bets by moving soybean acres into corn acres. That could increase the corn supply. However, Wisner expects the corn market to find at least seasonal strength.

Of course, economics always sway farmers’ decisions. “The soybean market is likely to move up enough to keep acreage from declining too much,” says Wisner.

Moving acres from corn to soybeans will likely mean that farmers will plant corn in the same fields that they planted corn in last year, altering their crop rotations.  That could lead to about a 7 percent decline in corn yields, says Hurt.

“It would be better in 2005 to plant soybeans, even if you have to spray twice for soybean rust, as opposed to planting corn and reducing yields by 7 percent,” says Hurt.

Climate does influence soybean rust’s spread. For example, west of the Mississippi River the climate is hotter and drier than is ideal for soybean rust.

“Annual rainfall in Iowa is typically between 32 inches and 35 inches, while Brazil’s annual rainfall (which had problems with soybean rust last year) is between 75 inches and 80 inches in northern areas, most of it coming during the soybean growing season,” says Wisner.

It’s difficult to predict how rust will spread. However, researchers at Iowa State University and St. Louis University have developed a way to predict where soybean rust will spread to next. By using weather-prediction tools the team hopes to be able to alert U.S. soybean producers when spores are headed their way so that they can promptly spray fungicides.

Wisner points out now that soybean rust is in the United States there’s a 50 percent to 60 percent chance of it hitting the central cornbelt in any given year. Risk is lower in the Great Plains, but higher in parts of the eastern corn belt.

“If rust survives winter in the South, the Eastern Corn Belt becomes very susceptible,” says Good. “We expect to see rust in the Eastern Corn Belt three out of every four years.”

However, with every crisis comes opportunity, so pork producers will have some options to price their soybean meal for the coming year.

“Pork producers should watch the soybean market for opportunities to lock in reasonable soybean meal prices,” says Wisner. “I expect soybeans and soybean meal to trade in a wide range; and when you see a drop in meal prices you may want to lock in some of your needs.”

“If South America’s soybean crop is strong, you could see related summer futures contracts decline, offering pricing opportunities with the June, July and August soybean meal contracts,” says Good.

While Asian soybean rust will be a continuing challenge in the future, the immediate impacts may not be as bad as first feared. Yields could be a bit lower, and some acreage might switch to corn or cotton, but it won’t be a disastrous year for soybeans. Hurt points out that it might be a year of learning. Brazil has managed soybean rust without yield declines, so there is no reason to believe the United States can’t do the same.

“Even with higher prices, soybean meal is still probably the best protein option for pork production,” says Good. 

For more information on soybean rust visit www.stopsoybeanrust.com on the Web.