CHICAGO (Reuters) – Since the mid-2000s, farmer Paul Thomas from North Dakota has planted more land with soybeans as China's demand for oilseeds grew. The shift peaked this year, when Thomas had planted 1,600 of his 5,000 acres with soybeans.
FILE PHOTO: On a farm in Buda, Illinois, USA, July 6, 2018, a trailer is being filled with soybeans. REUTERS / Daniel Acker / File Photo
But Thomas and many farmers like him plan to return to the old US farm belts in 2019: corn and wheat. The change will reverse a trend in which US farmers planted soybeans over corn this year for the first time in 35 years.
The expected shift to other cereals is expected as farmers have difficulty selling the soybean harvest due to President Donald Trump's trade war with China. China usually buys 60 percent of US soybean exports, but has barely bought any in months due to the trade war and pushed prices down to a decade-low.
Thomas plans to grow more wheat next year. He hopes that he can earn more by reducing his dependency on the crop dependent on Chinese demand.
Soybean prices "beat our butts," said Thomas.
Without China, Thomas said that local cash prices near his farm are $ 7.10 per bushel of soybeans, below the $ 8.50 needed to cover the cost.
The trade war hit US farmers at a vulnerable time. They planted more acreage than ever before with soybeans this year, harvesting the largest crop in the US so far.
But Beijing imposed an import tax on US soybeans in July to avenge Trump's taxes on Chinese imports into the United States.
The US Department of Agriculture, in its first estimate of next year's planting agency to include the effects of tariffs, has expected an increase of approximately 3 million hectares to 92.0 million hectares on Friday for 2019 corn crops. Wheat acres would rise from 47.8 million this year to 51.0 million hectares, while soybean hectares would drop to 82.5 million hectares.
Soybean crops planted before the introduction of retaliatory tariffs rose to 89.145 million this year, an increase of 15 million acres over a decade earlier.
Corn acreage has increased by less than 5 million hectares to 89.1 million hectares since 2008, while 47.8 million hectares of wheat this year were close to the lowest in a century.
Aron Carlson, president of the Illinois Corn Growers Association, spent nearly half of its 3,600 hectares on soybeans this year, but plans to decline.
He said he could increase corn planting on his northern Illinois farm by up to 20 percent. The state is the largest US soy producer.
Soybeans provide less bushels per hectare than corn, but also require less fertilizer, which generally makes them cheaper. Switching to corn could increase farmers' costs, but some companies, including fertilizer sellers such as The Andersons Inc., could benefit. Pat Bowe, chief executive of the company, told Reuters that he expects to switch to corn as a fertilizer.
Bayer AG also expects to switch to corn.
"Corn has a longer growing season, more problems with weeds and mushrooms … This is an asset to our entire business," said Liam Condon, president of the company's Crop Science division, at an event in St. Louis this week.
While soya prices dropped to a decade-low on September 18, corn is not frequently exported to China and sinks to a 22-month low. Wheat prices have risen 19 percent this year as reserves in many export countries have fallen to their lowest level since 2007/08.
Corn demand has benefited from long-term livestock and grain-based ethanol growth. The drought in Brazil and Argentina also made corn importers more dependent on the United States.
From June to September, a record 3.2 billion bushels of US corn were consumed, the USDA said on September 28th.
Illinois farmer Eric Honselman said his family farm planted about 5,000 acres of corn and soybeans on 5,600 hectares. In the coming year, however, corn production is likely to rise by up to 5 percent.
"Next year we will have corn longer than soybeans," Honselman said. "Every time the market tells me to grow corn, I will do it."
Reporting by Michael Hirtzer; additional coverage by Tina Bellon; Arrangement by Caroline Stauffer, Tom Brown and James Dalgleish