The U.S. Department of Agriculture's March Prospective Plantings report indicated that, in 2005, U.S. producers would sow 73.9 million acres of soybeans.
Sunflower planting is anticipated to surge 47 percent this year to 2.75 million acres. Similarly, canola planting is slated to rebound by 21 percent in 2005 to 1.05 million acres. U.S. farmers also indicated that they would plant 1.6 million acres of peanuts in 2005, which would represent the largest planted area since 1994.
USDA raised the 2004/05 soybean export forecast to a record-breaking 1,080 million bushels from 1,045 million previously. U.S. farmers took advantage of the higher prices over the past 6 weeks to catch up on sales, which are seen boosting the season average price from $5.05-$5.45 per bushel to $5.25-$5.55 per bushel.
Based on a prolonged drought, Brazil's soybean output for 2004/05 was projected down to 54 million metric tons this month compared with the March forecast of 59 million. A lighter marketing pace is now viewed to reduce 2004/05 exports from Brazil to 20.25 million tons from the previous forecast of 21.1 million.
The USDA's March report indicated that, if realized, U.S. soybean growers would plant 1.3 million acres less than last year's record. The main cause for the reduction is a sharply lower price level for soybeans, although a price rally since February may have prevented farmers from contemplating an even bigger decrease.
Most of the decline in soybean acreage is expected for North Dakota, South Dakota, Illinois, Indiana, and across the South. The 2005 soybean acreage intentions for Louisiana, Arkansas, South Carolina, Mississippi, Georgia, and Alabama fell by a combined 0.6 million acres. Producers in these states generally plan to plant more cotton and peanuts, instead.
Farmers in the Northern Plains signaled intentions to produce more spring wheat and other oilseeds this year in lieu of soybeans.
The USDA survey found that 89 percent of U.S. soybean farm operators are now aware of the presence of Asian soybean rust in this country. Producers are rightly concerned about the disease's potential for severe damage, but in light of the many unknowns about how it may or may not affect them individually, their primary determinants for planting decisions this spring still appear to be the expected relative returns and maintaining crop rotations. Only 11 percent of survey respondents agreed that soybean rust was a factor in their current planting intentions. The highest proportions for the affirmative responses were in the southern states considered most likely to see an initial outbreak of the disease, which is where the proportional reductions in intended soybean plantings were the greatest.
Many of the Southern farmers that are being undeterred from growing soybeans may have protected their interests by purchasing a higher level of crop insurance coverage this spring, USDA speculates. Considerable effort has been taken to help them learn how to detect rust episodes early and perform the recommended protective and curative treatments with fungicides.
In contrast to soybeans, American farmers intend to substantially raise the acreage sown to sunflowers, canola, flax, and peanuts in 2005. Sunflower planting is anticipated to surge 47 percent this year to 2.75 million acres. This would be the most sunflower acreage planted in 5 years. The revival of interest for growing sunflowers is being stimulated by the attractive prices that followed last year's poor North Dakota harvest.
In March, the national average farm price for sunflower seed was as high as it has been since the 1993/94 season, exceeding $15 per hundredweight. The sunflower seed shortage has sharply reduced crushing this season. In turn, this has caused sunflower seed oil prices to soar (to more than double the value of soybean oil) toward 47 cents per pound in March.
Oil-type sunflower seed varieties, which account for nearly 80 percent of the total acreage, should comprise the majority of the acreage expansion.
Similarly, canola planting is slated to rebound by 21 percent in 2005 to 1.05 million acres. Nearly all of the increase would be in North Dakota. Canola output there fell last year due to wet conditions that prevented planting and a loss of acreage to other crops (particularly soybeans).
With 2004/05 domestic food demand for peanuts continuing to surge and farmers in the Southeast looking for crop alternatives, the Prospective Plantings report indicated an intention to expand 2005 peanut plantings by 12 percent.
U.S. farmers indicated that they would plant 1.6 million acres of peanuts in 2005, which would represent the largest planted area since 1994.
Continuing a pattern seen since passage of the 2002 Farm Act, the share of U.S. peanut acreage from the Southeast (Alabama, Florida, Georgia, and South Carolina) could rise relative to the Southwest (Texas, New Mexico, and Oklahoma) and Virginia-North Carolina regions. If planting intentions are realized, the Southeast would represent nearly 74 percent of national acreage, compared with 53 percent in 2001.
In the Southeast, peanut planting intentions are up in every state from last year, for a combined increase of 175,000 acres (18 percent) to 1.2 million acres. Most notably, Georgia producers indicated that they would sow 750,000 acres in 2005, compared with 620,000 acres last year.
The rise in peanut plantings in Georgia is motivated, in part, by the search for alternatives to soybeans, corn, and cotton. Area sown to these crops in Georgia could decline by an aggregate 215,000 acres due to a combination of their much lower prices and higher input costs versus the preplanting period a year ago. Also, 2005 planting intentions are up 8 percent for Alabama (to 215,000 acres), 7 percent for Florida (to 155,000 acres), and 57 percent for South Carolina (to 55,000 acres).
In contrast, growers in the Southwest and Virginia-North Carolina regions indicate little or no change in their planting intentions compared with 2004. Virginia growers intend to reduce plantings to 25,000 acres, the lowest on record dating back to 1909.
U.S. export shipments of soybeans were a comparatively strong 96 million bushels in March. Previous expectations for a massive surge in export shipments from Brazil this spring are considered less likely now, so for the remainder of the 2004/05 season the shift over from U.S. shipments should be gradual. New export sales over the past 6 weeks have therefore stayed seasonally strong. Thus, USDA raised the soybean export forecast to a record-breaking 1,080 million bushels from 1,045 million previously.
Firm prices for soybean meal and soybean oil are also supporting a steady rate in the domestic crush. The U.S. cumulative crush through February 2005 of 864.1 million bushels is surpassed only by the record 2001/02 pace.
Despite the record rate of soybean use between September and February (which does not include a quantity of early harvested beans that were actually used last August), there is still an ample amount of stocks that remain on the farm yet to be sold.
The latest Grain Stocks report found that March 1, 2005, national soybean stocks totaled 1,381 million bushels. Of that entire inventory, on-farm stocks comprised 795 million bushels, more than double the level from a year earlier.
Even with a reduction for the 2004/05 ending stocks forecast due to the brighter export outlook, they are expected to be at a 17-year high of 375 million bushels.
These market fundamentals suggest that the bulge in prices over the past 6 weeks could be a temporary reaction to the deterioration of production prospects in Brazil.
Yet, U.S. farmers took advantage of the higher prices during that period to catch up on sales, which are seen boosting the season average price from $5.05-$5.45 per bushel to $5.25-$5.55 per bushel. Prices for soybean meal and soybean oil may ease somewhat in the near future, USDA says, although the overall price outlook for both commodities may remain stronger than it had been prior to the deterioration of yields in Brazil.