Lexington, Kentucky
November 21, 2007
Last fall the talk in farm circles
focused on the demand for corn and how the market favored corn
production. But in one short year, the tables have turned making
soybeans the crop most in demand going into 2008.
Both crops, along with wheat, are likely to be profitable in
2008, said an agricultural economist with the
University Of Kentucky College
of Agriculture. But the price ratio between corn and soybeans
definitely favors soybeans.
“Farmers will have to respond to the market,” said Kenny
Burdine, UK agricultural economist. “It doesn’t mean they should
totally abandon their crop rotation, but there will be a shift
toward more beans.”
The shift toward soybeans will be price-based, but it is also
the logical crop rotation pattern on most Kentucky farms with
full-season or double-crop soybeans/wheat typically planted
following corn.
In 2007, Kentucky farmers and farmers across the nation
responded to market demand for more corn with Kentucky farmers
planting 295,000 fewer soybeans acres and 320,000 more acres of
corn.
Nationally, the result was a 21 percent increase in harvested
acres allowing production to exceed the increase in use, giving
the corn supply a slight cushion. At the same time, soybean
acres and yields dropped, resulting in an 18 percent smaller
crop in 2007 than 2006. Soybean use has been steady making for a
very tight supply for the upcoming year and setting the stage
for much higher prices in late 2007.
As a result, many soybean acres lost to corn in 2007 will likely
return in 2008. In Kentucky, a number of those acres will be
double-cropped soybeans following the winter wheat crop. Wheat
prices are also strong, encouraging farmers to grow that crop as
well. Those acres were planted in October and early November,
but the actual number is not yet known. Nationally, soybean
production is likely to increase by four to seven million acres
in 2008.
“Unless something drastically changes between now and spring, we
won’t see many continuous corn acres in 2008,” Burdine said.
Demand for corn, wheat and soybeans is expected to remain strong
through 2008, and barring major weather problems, it should be a
profitable year for grain producers, Burdine said.
Prices for 2008 corn and soybeans have been trading in the $4
and $10 range, respectively on the Chicago Board of Trade. With
prices at these levels, it is not too early to price a portion
of the 2008 crop, Burdine said. There are several options
farmers have in forward pricing.
“But if anything was learned in 2007, it was that contracting
too high a percentage, too early, can leave you worried about
making delivery,” Burdine said. “So, since the crop isn’t even
in the ground, farmers need to be realistic about the amount of
grain that is forward priced.”
UK College of Agriculture, through its land-grant mission,
reaches across the commonwealth with teaching, research and
extension to enhance the lives of Kentuckians.
By Laura Skillman |
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