USA Will Switch From Corn to Soybeans

In 2021, growing corn has proven to be very profitable for US farmers. The cost of this product is up 45% and is not expected to decline in 2022.

This is primarily due to a decrease in supply on the market with an increase in the needs of companies for ethanol. In addition, a significant portion of the corn crop was exported. All these factors led to the fact that the cost of corn in the United States broke records in the spring. On the Chicago Stock Exchange, grain futures due in March 2022 are trading at more than $6 per bushel.

Corn remains the main feedstock for ethanol production, and nearly 40% of the total crop is sold to companies that produce ethyl alcohol. This ensures high demand, and hence the rise in prices. In addition, the cost of grain is supported by the high price of fertilizers. The cost of fertilizers more than doubled in 2021, and this fact provides significant price support. Growing corn, however, requires a large amount of fertilizer, which is why American farmers are looking for alternative solutions. The solution may be to switch to soybeans.

According to S&P Global Platts Analytics, in the agricultural season 2022/23, more than 1.2 million hectares of sown areas sown with corn can be used to grow soybeans. It is expected that the acreage of corn and soybeans will be equal and amount to 36.42 million hectares. This is due to the fact that growing soybeans requires less fertilizer.

Rabobank analysts also believe that the volume of corn-planted areas will decrease and will amount to 37.15 million hectares. This is a milder forecast compared to S&P Global Platts Analytics. It is based on the decline in nitrogen prices that occurred in November-December 2021.