Will US farmers prefer to decrease corn area in favor of soybeans?

In mid-April, the US farmers will start to seed soybeans unless cold temperatures delay the start of the seeding campaign, UkrAgroConsult reports.

USDA surveys conducted early in March showed the priority of corn area over soybeans. In its turn, soybean area was estimated 1.1% lower than the 5-year average (83.5 ml acres against 84.4 ml acres).

However, those surveys had been made before the steep decline in the crude oil and ethanol prices. Market participants are considering the possibility of higher soybean area (compared with initial expectations) at the expense of corn.

Factors in favor of soybeans:

– warming in the China-US relations   

According to the available information, in the first six month of the season (September-February 2019/20) exports of the US soybeans visibly improved in the destination of China as shipments increased by 210%.

– logistical issues in South America due to quarantine

Delays in the supplies from Brazil (which should have boosted exports of the new crop in February) provoked the decline in soybean stocks of China to the record lows. Large supplies from Argentina were not available to the seasonal factor - depletion of the old crop stocks.

– Chinese government extended tariff exemption for US soybean by May shipment.

Factors against soybeans:

– high ending stocks in the US expected in 2019/20 MY

– low price of soybean futures in Chicago

– price competition with South America

In view of this season’s pace, 2019/20 imports will drop to 950 KMT (down 7% on the year).