Key points:

  • Due to low corn prices and lower soybean production costs, farmers are increasing acreage for the second crop.
  • The soybean area is projected to increase by 3.5% and corn fields to decrease by 4.9%.
  • US soybean stocks are expected to increase by 30% to their highest level in 5 years.

With soybean and corn prices hovering at three-year lows, American farmers have adjusted their spring planting campaign. Now they prefer soybeans, replacing part of the corn fields with it. This decision is driven by the lower production costs of soybeans, making it a more profitable crop.

For the first time, many farmers are planting soybeans in the same field two years in a row, breaking with the traditional soy-corn-soybean rotation. His strategy, like those of many other farmers, is aimed at minimizing possible losses.

How American farmers are trying to reduce losses

An increase in soybean plantings against the backdrop of declining demand from importers and domestic processors is fraught with a fall in prices, a further increase in already significant global reserves and a reduction in the income of US farmers. This could lead to the sharpest annual decline in dollar prices on record.

At the same time, alternative options for Midwestern farmers—planting more corn or leaving fields fallow—could lead to even greater losses.

While soybeans now look like a more attractive crop than corn from a profitability standpoint, another bumper harvest could cause prices to collapse, hurting farmers’ incomes.

Farmers will plant 86.5 million acres of soybeans nationwide this spring, the fifth-highest on record, according to a March USDA forecast. Some analysts expect a further increase in soybean acreage by a million acres or more due to heavy rains that could prevent corn planting.

Cost scale

The analysis found that in northern Illinois in particular, farmers could see losses on average of $140 per acre for corn and $30 per acre for soybeans if fall delivery prices were $4.50 and $11.50 per bushel, respectively. However, actual profits can vary significantly from farm to farm, depending on factors such as yield, timing of grain sales, and whether the farmer owns or leases the land.

The decline in fertilizer prices compared to last year’s peak is not offset by falling crop prices. High land costs and rising interest rates on operating loans and equipment will likely force farmers to cut spending, economists predict.

To optimize costs, farmers often choose soybeans over corn because the crop requires fewer fertilizers and pesticides and generally has lower seed costs.

More soybeans, less corn

The US Department of Agriculture, in its early spring forecast, reports a 3.5% increase in soybean acreage this year, while a 4.9% decline in corn fields.

The planting expansion is expected to boost U.S. soybean stocks next season by more than 30%, to the highest level in five years and the sixth-highest ever. At the same time, according to the US Department of Agriculture, production growth is outpacing demand in both domestic and export markets.