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U.S. farmers may turn to soybeans and away from corn

Reuters / The so-called battle for acres on U.S. farmland heated up last month when soybean prices rallied to a six-month high against corn, which could be a catalyst for increased soy production.

New-crop November Chicago Board of Trade soybeans gained more than 55 cents on December corn, solidifying some farmers’ decision to boost their soybean seedings.

Many were already leaning in that direction because last year’s drought took a heavier toll on corn than soybeans.

Mark Degler, a farmer in Mattoon, Illinois, said he “just got burnt too many years in a row” on corn and will grow more soybeans.

New-crop corn futures dropped below $6 a bushel for the first time in six months in late December, and Degler said it would take a rally back to $8 a bushel to entice him to increase his corn acreage.

“Reality comes knocking eventually,” Degler said. “We have had three soft crops in a row.”

He averaged just 80 bushels per acre in 2012 while soybean yields were in the 40s. In his county, the average corn yield from 2007 to 2011 was 169.3 bushels per acre compared to 51.8 bushels per acre for soybeans.

In general, growing corn is a more expensive proposition but higher yields typically make up for the additional input costs. On high-productivity farmland in central Illinois, the net return on corn plantings averaged $119 per acre from 2005-11 versus $64 per acre for soybeans.

The profit expectations make it difficult for farmers to cut back on their corn seedings, even with the higher risks and a nine per cent drop in new-crop corn futures during the fourth quarter of 2012.

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