Corn’s price drop has farmers looking to soy

DES MOINES, Iowa – Farmers spent the last few years planting as much corn as they could, but with its price half what it was a couple of years ago, the crop’s golden luster has dulled and many growers are considering shifting acreage back to soybeans.

A December survey of more than 1,600 producers by Farm Futures, an agriculture-focused magazine and website publisher, indicated farmers intend to reduce corn planting to 92 million acres, a 3 percent reduction from last year, and boost soybeans about 7.6 percent over last year to 82.3 million acres. That would be a soybean acres record. More than 97.4 million acres were devoted to corn in 2013, which was the most since 1936.

The official word on farmers’ intentions won’t be released by the U.S. Department of Agriculture until March 31.

Even if corn production falls by a few million acres and prices rise it’s unlikely to have much effect on grocery prices. Less than 10 percent of the U.S. corn crop is used in food ingredients, like corn flakes and corn meal. Most is used for ethanol production, animal feed and exported.

Futures prices for corn from next year’s harvest are now near break-even or are below cost for many farmers. Soybean prices are more profitable but could drop if South American farmers have a good harvest in February and March, boosting global supply.

“That’s why everybody has to keep their pencils pretty sharp on the corn versus beans equation,” said Darrel Good, an agriculture and consumer economics professor emeritus at the University of Illinois.

Corn was selling above $8 per bushel in the summer of 2012 and had fallen to around $4.26 per bushel Thursday on the Chicago Board of Trade. Last week, corn dropped to its lowest price in more than 3 years on the news of a large increase in ethanol supplies.