A December survey of more than 1,600 producers by Farm Futures, an agriculture-focused magazine and website publisher, indicated farmers intend to reduce corn planting to 92 million acres, a 3 percent reduction from last year, and boost soybeans about 7.6 percent over last year to 82.3 million acres. That would be a soybean acres record.
The official word on farmers' intentions won't be released by the U.S. Department of Agriculture until March 31.
"Farmers are going to plant what's going to make them the most money," said Kevin Scott, who farms on about 2,500 acres in the southeast corner of South Dakota near Valley Springs. "In the years past, corn on corn on corn made them the most money. When it doesn't pay to do that, they're going to switch. The economics on soybeans are OK so they're going to come back to it."
Even if corn production falls by a few million acres and prices rise it's unlikely to have much effect on grocery prices. Less than 10 percent of the U.S. corn crop is used in food ingredients, like corn flakes and corn meal. Most is used for ethanol production, animal feed and exported.
Still, higher prices could increase the already high cost of meat, because corn is staple of animal feed. And when farmers struggle to make a profit, they're less likely to buy tractors and other equipment, which can have a ripple effect on manufacturers and farm communities.
Futures prices for corn from next year's harvest are now near break-even or are below cost for many farmers. Soybean prices are more profitable but could drop if South American farmers have a good harvest in February and March, boosting global supply.
"That's why everybody has to keep their pencils pretty sharp on the corn versus beans equation," said Darrel Good, an agriculture and consumer economics professor emeritus at the University of Illinois.
A popular rule of thumb has been for farmers to plant more soybeans if the price is at least 2 times that of corn. Currently, the market prices soybeans for delivery next November at $11.23 per bushel. The comparable corn price is $4.54. That puts the soybean price at 2.47 times corn price.
Many farmers have been planting more corn in the last few years because prices were so high.
Corn demand began increasing in 2008 as ethanol production boomed. Prompting some farmers to put land back into production that had been enrolled on conservation programs and to pull out fences and take down barns to clear additional acres to plant.