Minnesota farmer Dave Eiynck was surprised earlier this month when his seed dealer called to say he had obtained a particular kind of corn seed.
It was unusual, as the dealer had previously warned he was unable to fill nearly a third of Eiynck’s order for seed to cover about 1,320 acres due to short supplies.
Supplies of key varieties of top-quality corn seed are loosening from the tightest level in more than a decade as farmers from North Dakota to Kentucky shift small portions of their land to soybeans from corn to take advantage of surging prices.
The subtle shift in plantings could help rebuild global soy supplies hurt by a drought in South America that has rallied U.S. futures by about 12 per cent since December and restrict a much-needed rebound of corn inventories from a 16-year low this summer.
Eiynck, for one, did not even want the corn seed his dealer finally got his hands on.
“I told him I wasn’t interested because I was switching my acres over to beans,” he said.
Soybeans have been turning heads since Chicago Board of Trade futures for November delivery, the contract that represents the crop that will be harvested this fall, climbed seven per cent in the days after the U.S. Department of Agriculture said plantings would fall short of expectations.
The USDA estimated on March 30 that plantings would drop 1.4 per cent from last year to 73.9 million acres, sparking the rally to encourage more plantings.
Prices for CBOT December corn, which reflect prices for this year’s harvest, lagged after the USDA projected corn plantings will reach a 75-year high of 95.9 million acres, up four per cent from last year.
Plus, farmers have been planting at a record pace due to unseasonably mild weather, giving them a head start in March.
The new availability of corn seed is welcome news to those growers as the market for corn seed has been tight since a heat blast last summer hurt the seed crops.
Acres add up
Individual farmers are only switching a small number of their total acres because many have already applied fertilizer to fields that is needed to grow corn but not soybeans. The warm weather that is favourable for corn planting also has made them reluctant to change course, keeping demand for corn seed strong.
Still, the shift of 100 acres here and there across the country is freeing up pockets of corn seed and could alter the supply picture in the world’s top producer of corn and soy.
“You add it all up and it could easily be a million or two million acres across the country” that change to soybeans from corn, said Mark Knight, founder of Ag Hedge, an agricultural hedging company.
A switch of two million acres out of corn could mean farmers will produce 328 million bushels less of the grain than previously expected, based on USDA’s yield forecast of 164 bushels per acre. That would be roughly two per cent of the upcoming harvest, based on normal yields and abandonment of planted acres. Food companies and governments around the world are keeping a close eye on the outlook for corn, as U.S. inventories are expected to drop to the lowest in 16 years by September.
One day this month, Jared Nitschke, a general manager for seed seller Allied Agronomy in North Dakota, received calls from two farmers wanting to plant soybeans on 1,200 acres they had formerly intended to sow with corn.
Soybeans are especially attractive because farmers don’t have to apply costly nitrogen fertilizer or spend money drying the crop after harvest.
Allied Agronomy allows farmers to exchange their corn seed for soybean seed because it has inventory return policies with the companies it buys seed from.
In Nitschke’s sales territory, which covers south-central North Dakota, many customers have not picked up their seed yet, making it easy for them to switch their orders.
“It’s a matter of a paper trade,” he said.
In Kentucky, farmer Don Cecil returned a portion of the corn seed he ordered because he decided to switch 75 acres to soybeans. He said a neighbour did the same for 150 acres.
The overall shift has caught the attention of growers and seed dealers who are still on the hunt for particular varieties of corn seed.
Dan Sem, seed sales manager for SunPrairie Grain in North Dakota, received calls from seed dealers in Minnesota who “heard that out here in Midwest and North Dakota we were seeing a shift from corn to beans.”
“I’m getting calls from competitors that I compete with on a yearly basis looking for corn supply,” he said.
Pioneer Hi-Bred, one of the world’s top seed makers, made the corn seed that Eiynck, the Minnesota farmer, said he originally struggled to obtain.
The company has “an adequate supply of good-quality seed” to meet demand but faces local supply problems from year to year, said Terry Gardner, North American product marketing director.
“Corn orders continue to be very strong,” Gardner said. “Soybean orders are big and picking up.”
Those who suddenly find themselves with extra corn seed because of switching could cash in on demand, as planting is in full swing across the Midwest. So far, farmers and dealers said they had not run into any price gouging.
Indiana farmer Mike Nichols will plant soybeans on 100 of his best acres that were slotted for corn at the beginning of April, spurred to switch by climbing prices for the oilseed. He is aware his corn seed is hotly desired by others.
“The seed corn I haven’t taken delivery on, I can probably sell that for a premium,” he said.