By David Asbridge – Market Production Analysis and Market Outlook

By now, you’ve probably heard the United States Department of Agriculture (USDA) announcement about this year’s record soybean planting. Based on a survey done in early June, the 2010 Acreage Report, predicted U.S. farmers planted 78.9 million acres of soybeans.

The weather has not cooperated since then, however, so this number could be a bit high when the final figures appear next January. Some full-season soybeans have not been planted in some areas in the eastern and western Corn Belt due to heavy rainfall in those areas. Wet weather also delayed winter wheat harvest in some areas, which could prevent planting of some double-crop soybeans.

The 2010 planted acreage figure is the largest planted acreage number for soybeans in U.S. history. It represents an increase of around 1.4 million acres above the previous record set last year and approximately an 800,000-acre increase over the Prospective Plantings report issued in March. For comparison, this year’s acreage is more than 20 million acres higher than it was in 1990 when the soybean checkoff program was started. Much of that growth came from the decline in wheat acreage in the United States as wheat area has fallen more than 23 million acres during that same time period.

Continue reading to read a breakdown on soybean planting.

Iowa farmers planted the largest area to soybeans this year at 10.2 million acres, but farmers in 17 additional states planted more than a million acres. Illinois farmers planted the second-largest soybean acreage, followed closely by Minnesota. Missouri, Nebraska and Indiana come in together at approximately 4.5 million acres. After those states, the area falls until leveling off at about 1.5 million acres in North Carolina, Tennessee and Kentucky.

Despite an overall increase in soybean acreage, the changes in the states’ areas from 2009 are not very consistent. Looking at the same list of states in the accompanying chart, it can be seen that area increased dramatically in some locations while declining in others.

Iowa and Nebraska had the largest changes as soybean acreage jumped 600,000 acres each in 2010. Those two states, by the way, showed the largest declines in corn area this spring, which is not unusual as corn and soybean acreage changes typically counter to each other, especially in the Midwest. Kansas soybean acreage increased 400,000 acres, based mostly on a 700,000-acre decline in wheat area this year (tied with Texas for the largest drop in wheat area in 2010).  Minnesota soybean acreage moved 300,000 acres higher this year, although its corn area declined only by 100,000 acres. Missouri and Ohio both pushed their soybean acreage up by more than 100,000 acres.

On the negative side of the ledger, Arkansas showed the largest drop with a decline of 270,000 acres in 2010. It had a much lower winter wheat area this year, and total acreage dropped dramatically in that state. North Carolina soybean area fell by 250,000 acres this year, following a jump in 2009 to the highest level in state history. North Carolina also experienced a large decline in winter wheat area. Illinois, Indiana, North Dakota and Tennessee had declines in soybean area of 100,000 acres or more this year.

Now that we have an idea about soybean acreage for this year, the question moves to yield, production and usage. USDA estimates farmers will achieve yields of 42.9 bushels per acre this year. That represents a decline from the 44.0-bushel record achieved last year but remains slightly above the 20-year trend estimate. If this yield holds up, production will dip slightly this year to 3.35 billion bushels, barely under 2009’s record 3.36 billion. This level of production, following the record production levels set by the United States, Brazil and Argentina last year, will likely overwhelm demand, leading to a jump in ending stocks. Ending stocks for the 2009 crop year are expected to settle at 175 million bushels, an increase from the 2008 level but still relatively tight. With the production mentioned above, the 2010 ending stocks would move up to 360 million bushels, not too big but still considered a bit of a surplus. This will contribute to world stocks moving up to 2.5 billion bushels, slightly higher than last year and well above the 1.6-billion-bushel level of just two years ago. This will likely put pressure on prices, with USDA expecting average 2010 cash prices to center around $8.85 per bushel, down from this year’s estimate of $9.55.

Come back next month for the first field-based yield estimate and to see where the market may be headed once we get well into the summer weather markets.  And don’t forget to leave any comments in the space below.