In what might be considered a bit counter-intuitive, U.S. soybean acres planted have dropped to the lowest level in 12 years… despite increased interests in biodiesel… a product that often uses soy oil as its feedstock.
This story posted on Forbes.com says the culprit is more farmers switching to corn to make the even more popular ethanol:
The USDA reported that farmers seeded more corn this year than they have since 1944. The estimated 92.9 million in corn acres planted beats the USDA’s original estimate and represents a 19 percent increase over last year.
A surge in corn prices above $4 a bushel in February – when crop insurers determine the current year’s payout per bushel – made converts of many farmers who had harbored doubts over whether corn prices would stay high.
“I think corn and soybean producers became believers that this wasn’t going to be a flash,” said Chris Hurt, an agricultural economist with Purdue University. He described the decline in soybean acreage as “jaw-dropping.”
The USDA reports soy for biodiesel will only make up about 5 percent of the all renewable fuels in the U.S. this year. Meanwhile, 9.2 billion gallons of ethanol will be made from corn, compared with just 500 million gallons of soy biodiesel.
But the news has been good for the farmers who have stuck with soybeans. Market prices for soybeans rose sharply on the news Friday.