By Katie Micik
DTN Markets Editor
OMAHA (DTN) -- Farmers will likely shift acres from corn to soybeans in 2015 because of the more favorable economics, a report from private analytical firm Informa Economics said.
Informa forecasts corn acreage will decline 3.1 million acres from 2014 to 87.8 ma, while soybean acreage will climb 4.3 ma to 88.5 ma.
"The expectation that corn acres will be less than 2014's 90.9 million acres helps to give corn prices support at these lower levels, but is not necessarily bullish by itself," Hultman said. "The expectation that soybean acres will be increased from 2014's planting of 84.2 million acres is bearish as it adds to notions of even higher soybean supplies in the fall of 2015."
Informa said that using its acreage projections and assuming normal abandonment and trendline yields, corn production comes in at 13.4 billion bushels and soybean production at 3.9 billion bushels.
Its acreage analysis for row crops was largely based on a profitability analysis and economic and weather conditions.
"Of the major row crops, soybeans continue to have the highest implied net revenue return per acres," Informa stated. A chart indicated soybeans' annual planning net revenue is about $200 per acre while corn's is about $29 lower. "Compared with last season, the current incentive to plant corn is lower. As a result, Informa expects that most acres shifted from corn will be planted to soybeans. Informa expects some cotton acreage to shift to soybeans as well due to the economic incentive to plant soybeans relative to cotton."
Informa sees cotton acreage declining 1.6 ma from 2014 to 9.5 million acres. According to Informa's net revenue chart, of the major row crops, cotton is the only one showing negative anticipated revenue for 2015.
Farmers aren't necessarily in agreement on the topic, according to one conversation on Twitter. Cory Ritter, a farmer in Blue Mound, Ill., argues it'd be tough for some farmers to increase soybean acres next year if they already made large increases in 2014. Several others added they're going to stick to their rotations.
Kyle Wendland, who farms near Fredericksburg, Iowa, thinks there are plenty of reasons, mostly economic, for farmers to increase soybean production. Traditionally, his area is heavy on corn-on-corn production. Given the revenue incentives, there's lots of land that could be planted to beans for the first time in a while.
Some farmers pointed to stubbornly high corn seed costs as a reason to plant more beans. Others argued that double-crop bean acres are likely to be higher next year.
While it's not a perfect benchmark, Hultman said the new-crop soybean-to-corn price ratio for 2015 is at 2.46, which is more in line with historical levels and less than the current 2.76 ratio. The higher the ratio, the higher the economic incentive is to plant soybeans over corn.
"More importantly, Dec 2015 corn is priced at $3.95, which is even with USDA’s estimated production cost per bushel for 2014-15," Hultman said. "Nov 2015 soybeans are priced at $9.73, which is below USDA’s estimated cost per bushel of $10.14 for 2014-15. This suggests a slight edge for planting more corn, but the problem here is that USDA’s soybean cost estimate may be low.
"I would say that it is too early yet to confidently know which direction plantings will go next spring."
Informa also released its forecast for wheat acreage based on its surveys, and it's little changed from 2014. Overall acreage was estimated at 56.4 ma, about 400,000 acres less than last year. Hard red winter wheat acreage dropped about 300,000 acres to 30.3 ma while soft red winter wheat acreage is expected to total 8 ma, down 238,000 acres.
Katie Micik can be reached at email@example.com
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