Planning for 2009: Corn Is Clearly Better Than Soybeans
Corn is definitely the better planting decision than soybeans. For the past few weeks I’ve been harvesting 200 bushel plus corn. It’s a far cry from some of my drought ravaged yields last year, but over the last 5 to 7 years, I think there is no doubt. Price simply doesn’t much matter anymore. When it comes to planting corn versus soybeans, plant corn. In 2009, corn’s agronomic superiority over soybeans cannot be denied.
The hard part of course is having faith to get that done into 2009. For instance in my own case, I’m set up in a common southwestern Ontario rotation of corn, wheat and soybeans. However, it’s weighted a little heavier on soybeans and wheat because simply put, I can plant them and harvest them so easily and quickly. Ditto for almost everybody else across Ontario farm country.
I have questioned many production experts about this. It happens every fall. I stand in on a soybean and corn plots demonstration and asks the question about corn yields versus soybean yields. While 200 bushel corn yields has become much more common in Ontario, 80 bushel soybean yields are unheard of. In fact 40 bushel yields are much more common in Ontario soybean fields than anybody would like to admit.
When I ask the question about why soybeans aren’t keeping up with corn yields, you can visibly see them grow uncomfortable. The standard answer is it must be easy to be a corn breeder. All they have to worry about is a couple of bugs, while the soybean breeder has to worry about rust, aphids, cyst nematode, bean leaf beetle, etc. I answer him by telling him about that Missouri farmer who gets 139 bushel plus soybean yields. He sighs. I tell him I’m a 100 bushel/acre behind him. He tells me he can’t quite believe it.
Clearly from my perspective “soybeans” have their problems. With that as a backdrop it was interesting to see the market action on November 6th. While corn had a double-digit loss caused mostly by sympathy with a heavily negative stock market, soybeans actually tried to rally. In many ways it was like canoeing up Niagara Falls. To me it was only a partial signal to soybean growers. That is price must move higher to get my North American and me colleagues to grow soybeans. As it is, with corn prices still above $4.25 Canadian going into 2009, it still beats the heck out of growing soybeans.
The question I have does everybody “get it” and how will the market react if we don’t going into next year’s planting decisions. Yes, I’m already warming you up for next March 30th 2009 USDA planting intentions report. Clearly from my perspective American growers will mortgage their future and decide to plant corn in 2009 versus soybeans. I believe they agree with me. However, the soybean market might have something to say about that in the next few months.
The tough part is sorting the bearish financial market effects on the planting decision process, which will surely be at hand shortly. In fact I’ve already ordered several units of seed corn already. For instance I mused last week that maybe the commodity markets have reached “bottom.” However, I was musing, nobody knows. Nonetheless where is the bottom in financial and stock markets? I’ve been feeling for it with my feet as I drive my combine, but I just can’t seem to find it. Terrible market plunges like we saw November 6th don’t help. As long as it remains volatile and prone to extreme shifts, the same will be taking place in commodity markets.
The effect of that going into 2009 may have the effect of skewing the planting decision process further. For instance we might never get a “signal” of what might be better to plant. Corn and soybean prices might be too busy gyrating along with GM, Ford and Enbridge instead of showing us what to plant. It may lead to a time ahead in grain markets where suddenly somebody wakes up to this. With soybeans being the poor boy in my opinion, which needs the greatest boost, maybe they’ll catch fire.
Whatever happens, at the end of the day, corn still beats soybeans. Corn’s agronomics are so superior to soybeans, it isn’t even close. The challenge for the soybean industry on both sides of the border is to recognize that. Breeding soybeans to fight aphids and rust might be a noble effort but at the end of the day, it’s all about yield baby. As I drive my combine through my cornfield, it’s obvious. Ditto across the greater Corn Belt. The market had better bail out soybeans because what those beans are made of now, surely won’t get it done.