The latest edition Purdue University/CME Group Ag Economy Barometer continues to suggest a significant switch out of soybeans among American producers in 2019.
Released on Tuesday, the barometer - which is based on a monthly survey of 400 producers across the U.S. -showed that 30% of respondents said they planned to reduce their soybean acreage next spring, up from 19% that planned to reduce acreage when the same question was posed in October.
Of the growers that plan to reduce their soybean acreage, nearly 7 out of 10 (69%) said they intend to cut back by more than 10% from 2018, up slightly compared to responses received in October. A further 26% of growers said they plan to reduce their 2019 soybean acreage by 5 to 10% compared to 2018, virtually unchanged from responses received on the October survey.
Meanwhile, it appears corn will be the alternative of choice for those reducing their soybean acres next year.
Two-thirds of respondents said they planned to grow more corn in response to fewer soybeans, while 20% said they intend to plant more acres to ‘other’ crops. (Responses in the ‘other’ category probably included plans for a variety of crops, but could also simply reflect uncertainty on the part of soybean growers, the barometer noted).
Winter wheat (8% of respondents) and spring wheat (6% of respondents) were the next two most popular crops named as alternatives to planting soybeans.
Soybean futures have been under heavy pressure so far in the 2018-19 marketing year, undone by heavy global supplies and the U.S.-China trade battle that has led world No. 1 buyer China to bypass American soy supplies in favour of alternative sources, mainly Brazil.
However, the November edition of the barometer didn’t capture any possible change in farmer sentiment that may have followed Saturday’s meeting between U.S. President Donald Trump and Chinese leader Xi Jinping. In that meeting, the two sides agreed to a 90-day period during which no new import tariffs would be levied and China apparently signaled its willingness to buy an unspecified quantity of American agricultural products.
Soybean futures closed with double-digit gains on Monday following the news, and are modestly higher again today at the noon hour.