US Farmers Plan to Plant Record 91 million Acres of Soybeans, But Global Fundamentals Remain Bullish

Published 2022년 4월 1일

US farmers plan to plant a record 91.0 million acres of soybeans in 2022, 4% more than in 2021. Farmers are switching to soybeans, at the expense of corn, due to high soybean prices, and comparatively lower input costs. Despite the record area estimate, global fundamentals are underpinning prices. The war in Ukraine, worse than expected soybean production in South America, and strong demand for oilseeds and their derivatives means prices will keep finding support.

Planting Intentions

US farmers plan to plant a record 91.0 million acres of soybeans in 2022, according to the USDA prospective planting report released on March 31st. The estimate is 4% higher than the 87.2 million acres planted in 2021.

High Price, Expensive Fertilizer Favors Soybean

Farmers are favoring soybeans, at the expense of corn for several reasons. The area to be planted under corn is estimated to drop by 4% to 89.5 million acres. Soybean prices have been high with several factors supporting prices. Russia’s invasion of Ukraine sent oilseed prices higher, with Ukraine and Russia being the world’s top two sunflower producers. The South American soybean crop was impacted by drought, and Brazil’s current production estimate stands at 127 million mt, from earlier estimates of 144 million mt. As restrictions related to Covid-19 are lifted worldwide, more people are dining out, raising the demand for cooking oils. Furthermore, demand for soybean meal has been strong coming from the poultry sector. Another factor favoring soybean production is the relatively lower use of nitrogen fertilizer for soybeans. Soybeans are part of the legume family, and consequently natural nitrogen fixers. Nitrogen fertilizer prices, for example, Urea, are more than 50% higher than a year ago. Currently, fertilizer costs for soybeans are much lower than that of corn, which is another reason for the swing from corn to soybeans.

Soybean Prices Fell in Intraday Trading

May Soybean futures traded on the Chicago Board of Trade (CBOT) started the day on the front foot, rallying to USD16.80/ bu before the report was released. However, right after the high soybean area estimate, prices dropped to a low of USD16.15/bu. Prices have since recovered to USD16.20/bu. Despite these intraday movements, soybean prices remain at multi-year highs. Despite the record soybean plantings, prices will still be supported by fundamentals in the soybean market which are mostly bullish.

US Supply And Demand

Although US soybean planting for the 2022/23 marketing year has not yet kicked off, the planting intentions for soybeans give an indication of what to expect in 2022/23. The five-year average soybean yield is 49.9 bu/ acre. Using this as a yield estimate means production could be a record 4,489 million bushels. Domestic demand for soybeans is estimated to keep increasing, leading to higher crush numbers. With the poor South American soybean crop, demand for US soybeans should remain strong, especially coming from China. US exports in 2022/23 are expected to be higher than this marketing year, at 2,200 million bushels. Ending stocks could drop from the current 2021/22 season estimates of 340 million bushels to less than 300 million bushels in 2022/23.