Switch to soybeans will drive corn prices up, say analysts
Some U.S. farmers are expected to return to rotating their crops after years of solid corn growing in the wake of the 2012 drought, wanting to avoid another year of risk as dry conditions are forecast to continue, according to analysts.
A shift in the primary grain states, such as Iowa and Illinois, could contribute to the increase in 2013 grain prices, which are already up due to stockpiles projected to hit historic 17-year lows by the end of the summer. Iowa and Illinois could each switch up to one million acres previously devoted to corn production over to other crops in 2013, according to Rabobank. That could mean a loss of up to 320 million bushels of corn from the 2013 harvest, based on the states’ five-year average yields. Farmers planted 14.2 million acres of corn in Iowa and 12.8 million acres in Illinois in 2012.
Corn requires more moisture than other crops such as soybeans, and the soil needs to be reinvigorated after years of corn-on-corn production. Soybeans naturally add the key fertilizer nitrogen to the land. ”Farmers are going to do their best to not do corn-on-corn any more than they have to,” said Rich Guebert, vice president of the Illinois Farm Bureau.
Even so, reports are still predicting a record acreage of corn planting in 2013, due largely to high corn prices. Rabobank is estimating total plantings will rise 0.5 percent to 97.6 million acres, which would be the most since 101.95 million acres were planted in 1936 before the advent of soybeans.