As crop reports keep filtering in, much like election returns, they will allow the opportunity to compare how your farm voted, or yielded, in relation to other parts of the Cornbelt. While corn has received the most attention because of short supply, high demand, and even controversy, the 2011 soybean crop will not be a bin buster itself.  The yield this year will be below the long term trend, which is concerning because of the global needs for soybean oil and soybean meal in human and livestock foods and feeds.  While the US is no longer the largest producer, there are indications that South America will not grow soybeans to the maximum and that will require some adjustments.

In the Cornbelt, farmers are convinced that corn will produce more revenue per acre than soybeans.  In China, soybean acreage will decline also, and there are indications that soybean revenue in South America is secondary to other cropping alternatives.  $7 soybeans used to be a money-maker, but the prospect of “beans in the teens” is not drawing much of a crowd.  Iowa State University economist Bob Wisner says prices will have to go high enough to avoid a sharp drop in global acreage, and if they don’t then consumers of soybean meal and oil will have to adjust their practices.

Whether it is domestically consumed or exported, soybean meal volume has been slightly declining and is being replaced by increasing amounts of distillers dried grains at an equivalent energy level to soybean meal.  Wisner says the steady use of corn in the coming year for ethanol refining, compared to increasing levels in recent years, means that livestock producers should not count on an abundance of distillers dried grains.  While that will put more demand pressure on soybean meal, there are indications that hog numbers will be steady and poultry demand will be 4-6% less, which means a softer demand for bean meal.

Internationally, the soybean supply is keyed on South American production and demand is a function of Chinese purchases.  China bought 2 of every 3 rows of beans exported by the US last year, but the recent rate of growth is expected to slow slightly.  China says it will shift to alternative sources of protein meal and use of its own stocks.  Its soybean oil imports are also expected to slow in an effort to divert inflationary food prices blamed on higher soybean oil prices.

The shortfall of soybeans in the coming year in the US is expected to be filled with soybean stocks, says Wisner.  Prospects for production for the new crop are dependent upon South American weather, and the LaNina weather is expected to continue both in North and South America.  That increases the drought possibility in the main production regions.  He says global stocks should be sufficient, but US stocks will be tight by the end of the current marketing year.

Prices are expected to promote more corn acreage in 2012 as farmers head to the field both in South America and the US.  But that prospect is also expected to be an underlying support for beans, meal and oil in the coming year.

Summary:
Soybean acres and production are expected to decline for both the South American crop now being planted and the 2012 US crop, due to higher revenues for competing crops.  That will cause tighter supplies of soybeans, meal and oil in 2012 and beyond, which will necessitate some users shifting to alternatives.  In the US, that will mean more use of distillers dried grains to replace bean meal, and in China, other oilseeds will be used along with Chinese stocks.  Prices are expected to remain high, in an effort to buy as many acres as possible.

Source: FarmGate blog