As spring planting continues to draw closer, farmers are all but ready to go. Mac Marshall is vice president of market intelligence for the United Soybean Board and the U.S. Soybean Export Council. He says farmers have to balance a lot of factors to get ready for planting in what is often a challenging market environment.
Marshall; “We had USDA come out with their expectations for the area for this next year and not seeing a lot of change in soy, some rebound in corn area. But we’re still weeks away from planting in many parts of the country, and the farmers are always balancing a whole suite of decisions. I always say farmers are going to balance what’s going to lead to economic viability and prosperity, gotta balance the economics with the agronomics, what’s going to be sound and best for your operation? Not just now, but for the years to come.”
While there are pressures ahead of planting, 2023 is a little more typical than what farmers faced last year.
Marshall; “There were tremendous market disruptions going on. I mean, Russia had just invaded Ukraine two weeks prior. Everybody’s trying to figure out what this means for world grain and oilseed markets, what that’s doing to price, and, at that time, the market was calling for a lot of corn. There was an expectation we’re gonna have a large corn area, I think, particularly in light of the fact that so much of that supply was not able to get out of Ukraine. Corn prices were calling for it. But with fertilizer price pressure and availability being an issue, that led to some sort of a pullback.”
Economics is only part of the decision. Marshall found that out last year when corn prices were rising higher because of the Russian invasion of Ukraine. Marshall; “By and large people were like, ‘I know corn prices are where they are, and I know bean prices were there, but I’m going to do what I can to stick to a 50-50 rotation because I gotta manage that nitrogen cycle.’ That’s the sort of thing where if you’re only looking at the balance sheets, you’re just looking at the futures prices, you’re not getting the full picture of some of the other things that go into farmers’ psychology and decision-making in agronomy and making sure you’re a good steward of the land and managing your inputs as best you can.”
There’s no doubt economics will play a big part again in 2023 due in large part to input costs that are still high. That means there may be some last-minute acre switching between corn and beans.
Marshall; “Fertilizer prices are not where they were last year, but let’s not pretend that it isn’t still a margin-compression issue. They’re still significantly higher than they were in 2021, and the same is true for a lot of inputs, so that factors into farmers’ decisions as well. It’s not just what’s going to grow well. It’s given input costs, can I make the right decisions that are going to shepherd the crop and put it in the best position? So, the big takeaway between now and the end of March? I think there’s still some time for that to volley back and forth.”