ERS Charts of Note
Subscribe to our Charts of Note series, which highlights economic research and analysis on agriculture, food, the environment, and rural America. Each week, this series highlights charts of interest from current and past ERS research.
At the end of the year, users can look forward to our Editors’ Picks of the Best of Charts of Note.
Friday, November 13, 2020
U.S. farmers can use a variety of market tools to manage risks. With a futures contract, the farmer can assure a certain price for a crop that has not yet been harvested. An option contract allows the farmer to protect against decreases in the futures price, while retaining the opportunity to take advantage of increases in the futures price. Futures and options usually do not result in actual delivery of the commodity, because most participants reach final financial settlements with each other when the contracts expire. In a marketing contract, by contrast, a farmer agrees to deliver a specified quantity of the commodity to a specified buyer during a specified time window. Corn and soybean farms account for most farm use of each of these contracts, and larger operations are more likely to use them than small. With more production, larger farms have more revenue at risk from price fluctuations, and therefore a greater incentive to learn about and manage price risks. Fewer than 5 percent of small corn and soy producers used futures contracts, compared with 27 percent of large producers. Less than 1 percent of small corn and soy producers used options, compared with 13 percent of large producers. And about 19 percent of small corn and soy producers used marketing contracts, compared with 58 percent of large producers. This chart is based on data found in the Economic Research Service report, Farm Use of Futures, Options, and Marketing Contracts, published October 2020. It also appears in the November 2020 Amber Waves feature, “Corn and Soybean Farmers Combine Futures, Options, and Marketing Contracts to Manage Financial Risks.”
Friday, October 23, 2020
The United States is a leading global producer and exporter of soybeans, and their export represents a significant source of demand for U.S.-produced soybeans. The export of U.S. soybeans in the 2020/21 crop year is already off to a strong start. Total outstanding export sales—the contracts by country that have not been shipped at any given time during the marketing year—totaled 34.2 million metric tons (1,257 million bushels), as of October 8, 2020, nearly three times the level of a year earlier. This surge is likely the result of strengthening livestock feed demand in China and depleted supplies for competing exporters, particularly Brazil. The increase is also a major contributor to the price rally currently underway, with new-crop soybean futures at a two-year high. This chart is drawn from Economic Research Service’s Oil Crops Outlook, October 2020.
Friday, September 11, 2020
Producers of some of the U.S. major field crops have struggled to cover total costs of production over the past decade. The Economic Research Service’s (ERS) Commodity Costs and Returns product estimates this gap or surplus in the calculation of the value of production less total costs, referred to here as net returns. Total costs comprise operating costs, which include expenses such as fertilizer, seed, and chemicals, and allocated overhead (economic) costs, which include unpaid labor, depreciation, land costs, and other opportunity costs. Although revenue from selling crops can typically cover operating costs each year, net returns have often been negative. This suggests that, in some cases, allocated overhead costs are not covered. Corn’s net returns increased early in the decade, primarily due to a boom in the production of corn-based ethanol. Corn yields and acreage remained high after the boom, leaving supply high and leading, in part, to lower prices and returns over time. Net returns for soybeans shadowed those for corn during the ethanol boom, remaining higher than those for corn up until 2018. Wheat prices and returns also declined, due to strong international competition and several high-yield domestic crops. This chart is derived from data collected from the ERS Commodity Costs and Returns data product. Its data can also be viewed via ERS’s interactive data visualization product, U.S. Commodity Costs and Returns by Region and by Commodity.
Monday, August 24, 2020
The soybean-to-corn price ratio is often used as one of several tools in measuring profitability of soybeans and corn. The current ratio of U.S. soybean to corn prices has recently risen, sending a signal to farmers that the relative profitability of soybeans has increased over corn. Soybeans and corn are crops that compete for acreage in production and are complements in feed use. Their futures prices—the price of a contract to deliver a bushel of soybeans or corn at a certain time in the future—are used to calculate a ratio through dividing the soybean price by the corn price. Higher price ratios indicate that soybeans are relatively more profitable than corn. This ratio, which averaged 2.51 over the past 20 years, can tell farmers whether planting, harvesting, and storing one or the other crop might be advantageous. The ratio can also be used by livestock producers to indicate the price direction for feed ingredients. When the USDA, National Agricultural Statistics Service's June 2020 Acreage report indicated that less corn acreage had been planted than expected in early spring, futures prices for corn in marketing year 2020/21 increased by 8 percent. Soybean futures prices increased at the same time. Since late June, expectations of higher corn yields eroded the futures price for corn by 2.4 percent, while the price for soybeans increased by 1.1 percent. This differential in prices led to an increase in the soybean-to-corn price ratio from 2.64 to 2.71, a 2.5 percent increase from late June. This chart and associated data are drawn from the Economic Research Service’s Season-Average Price Forecasts data product.
Friday, January 17, 2020
Palm oil is the world’s most widely consumed vegetable oil, used for a multitude of edible goods as well as for industrial applications, including biodiesel. Production of palm oil is dominated by the two top producers—Indonesia and Malaysia. Rising consumption of palm oil by major producing countries and falling output of vegetable oil by major importers, including India, China, and the European Union, have led to recent price increases for Malaysian palm oil. By October 2019, Malaysian prices had climbed to a 13-month high, and further price strengthening is possible next year. In addition to increased demand, palm oil supply and stocks are projected lower due to slowing production. For Malaysia, USDA lowered its estimate of palm oil production for October 2019 through September 2020 to 21 million metric tons. The reduction can be tied to Malaysian rainfall over the last 12 months being significantly below average, which can adversely affect palm oil yields for up to a year. A slower rise in palm oil output coincided with decisions by the Indonesian and Malaysian governments to increase the percentage that biodiesel must comprise in the total fuels supply. Starting in 2020, Malaysia will double its biodiesel requirement to 20 percent. This chart appears in the ERS Oil Crops Outlook newsletter released in November 2019.
Monday, September 30, 2019
U.S. soybean exports concluded the 2018/19 crop year with a flourish. At 180 million bushels, August export inspections of soybeans totaled an all-time high for the month. The data rounds out the September-August crop marketing year with an atypical export pattern: August shipments were nearly as high as in October and November. In contrast, exports for 2016/17 and 2017/18—as well as in previous years—followed a seasonal pattern with exports peaking in the late-fall and winter before falling to lower levels in the spring and summer. The unseasonably strong revival in U.S. export demand this summer was stimulated by competitive prices and a slowing of shipments from Brazil. China accounted for a majority of the August gain in U.S. soybean shipments, which surged when sales that were booked early this year were actually shipped. The lower 2018/19 export totals in the first half of the crop year were also attributable to China, as exports to the country fell due to tariffs on U.S. soybeans entering the Chinese market. As a consequence, USDA raised its 2018/19 estimate of U.S. exports this month by 45 million bushels to 1.745 billion. This chart appears in the ERS Oil Crops Outlook report released in September 2019.
Wednesday, September 11, 2019
Following planting delays in the spring of 2019 caused by excessive wetness, the USDA resurveyed crop acreage in August to determine how much was actually completed by the end of July. As a result, a new estimate of expected acreage was also made. The new data revised the estimate of planted soybean acreage downward for the 2019/20 marketing year (September–August) to 76.7 million. This reflects a 14-percent decline from last year and an 8-year low. The decreased acreage and expectations of lower yields translates to a projected 19-percent decline in production relative to 2018/19. Soybean prices are also expected to be lower in 2019/20, partially driven by continued trade tensions with China and the increased amounts of unused soybean stocks held in storage. Soybean prices are projected to average $8.40 per bushel in 2019/20, 10 cents below a year earlier and nearly a dollar below 2017/18 levels. Expectations of reduced production, coupled with lower prices, are likely to put pressure on soybean farmer revenues. If the projections are realized, the expected farm value of the U.S. soybean crop would fall to its lowest level in 11 years, from $38.6 billion in 2018/19 to $31 billion in 2019/20. This chart appears in the ERS Oil Crops Outlook report released in August 2019.
Tuesday, July 2, 2019
Soybeans are the largest and most concentrated segment of global agricultural trade. In March 2018, China proposed a 25 percent tariff on U.S. soybeans and implemented the tariffs in July 2018. In the first half of the Chinese marketing year for soybeans (October 2018–March 2019), Chinese imports of U.S. soybeans fell by nearly 22 million metric tons, down 89 percent relative to the same period in 2017/18. To offset the decline in U.S. soybean imports, China increased imports from Brazil and, to a lesser extent, Canada. China’s 11.5-million metric ton increase in imports of soybeans from Brazil was large enough to offset roughly half of the lost imports from the United States. Additionally, China increased its imports from Canada by 1.7 million metric tons. In total, however, increased shipments from Brazil and Canada did not offset the decline in imports of U.S. soybeans. China’s soybean imports were nearly 9 million metric tons (20 percent) lower in October 2018 to March 2019 than the same period in 2017/18. This chart appears in the ERS report, Interdependence of China, United States, and Brazil in Soybean Trade, released in June 2019.
Thursday, March 14, 2019
Commodity “stocks” refer to the portion of a commodity that is not consumed domestically, exported, or otherwise used and is therefore kept in storage for later use. USDA’s latest Grain Stocks report indicates that U.S. soybean stocks were at an all-time high of 3.736 billion bushels in December 2018 as the first-quarter of the 2018/19 crop year (September–August) ended. Rising stocks are an indicator of excess supply and/or reduced demand. In this case, a large beginning supply and a 40-percent decline in first-quarter exports pushed December 1 soybean stocks well above the year-earlier inventory of 3.161 billion bushels. U.S. export shipments still lag far behind the pace of a year ago. The deficit is primarily related to the steep decline in trade with China, despite a few recent sales to state-owned companies there. Total U.S. soybean supply is forecast to reach a record-high 5 million bushels in 2018/19. Elevated stocks often foreshadow falling prices. In February, the forecast 2018/19 average soybean price received by farmers was narrowed to a range of $8.10–$9.10 per bushel, well below the 2017/18 average of $9.33 per bushel. This chart appears in the ERS Oil Crops Outlook newsletter, published in February 2019.
Monday, August 27, 2018
Recent declines in China’s use of soybeans reduced expectations for the total volume of soybeans China imports for the 2018/19 marketing year. By early July, the price of U.S. soybeans imported by China spiked after the Government raised import tariffs on U.S. soybeans by 25 percentage points. Also, because of a 10-percent decline in the value of China’s currency (the renminbi) relative to the U.S. dollar since April, the relative prices of U.S.-sourced soybeans have risen. Chinese soybean processors have seen their profit margins decline because of (1) the direct effects of the higher tariffs and U.S./China exchange rate changes and (2) the indirect effects of these same factors, as other soybean exporters, such as Brazil, experience higher demand and, in response, may raise their prices. The cumulative imports for October 2017 to July 2018 virtually matched the year-earlier level at 77 million tons, and imports are expected to total 96 million tons by September, a modest increase from the previous year. In 2018/19, the volume of soybeans imported to China are expected to decline relative to a year earlier, totaling 95 million tons. This would be the first annual decline in Chinese soybean imports since 2003/04. This chart appears in the ERS Oil Crops Outlook newsletter released in August 2018.
Wednesday, August 8, 2018
Soybean prices collapsed in June under the combined pressure of favorable U.S. growing conditions, an increase in sown acreage, large old-crop stocks, and China’s tariff hike on imports from the United States. On June 1, cash soybean prices for central Illinois were $9.86 per bushel but, by early July, had plummeted to just above $8.00. Not since December 2008 have prices for the crop been that low. Following China’s recent implementation of an additional 25-percent ad valorem tariff on U.S. soybeans, USDA lowered its 2018/19 export forecast by 250 million bushels this month to 2.04 billion. Lowered export expectations—along with a very bright outlook for soybean crop conditions and for estimated acreage harvested—lowered prices. As a result of the outlook for crop conditions and for estimated acreage harvested, USDA raised its production forecast to 4.31 billion. Only last year’s record harvest of 4.39 billion bushels would be larger. Provided the crop continues to develop without major difficulties, post-harvest prices this fall are likely to be even lower. This chart appears in the ERS Oil Crops Outlook newsletter released in July 2018.
Monday, June 25, 2018
Brazil is a leading global producer and the world’s top exporter of soybeans. Long the second-largest producer following the United States, Brazil’s soybean output is currently forecast to exceed that of the United States by the 2018/19 marketing year. If realized, Brazilian soybean production will have risen by over 22 percent since 2015/16. Almost all of the increased production has made its way to the export market, which has risen 34 percent over the same time. In addition to significant growth in sales to China, Iran, and Russia, domestic conditions in 2018 have also driven up exports. The Brazilian real has lost 20 percent of its value since January 1 2018, and the country experienced a strike by the nation’s truck drivers in May. Since Brazil is highly dependent on truck deliveries, the work stoppage severely disrupted local supply chains. Despite road blockages that also stalled deliveries to ports, Brazilian soybean shipments in May reached a record high. Uninterrupted exports were made possible by an accumulation of soybean stocks at ports prior to the strike. Lengthening ship queues suggest that even more soybeans could have been shipped in the absence of disruptions to port deliveries. This chart appears in the ERS Oil Crops Outlook: June 2018.
Monday, May 21, 2018
The United States is a leading global producer and exporter of soybeans. Oilseed and oilseed product exports, particularly soybeans, represent a significant source of demand for U.S. producers and make a large net contribution to the U.S. agricultural trade balance. In the 2018/19 marketing year (September–August), total U.S. exports of soybeans (whole, meal, and oil) are expected to increase by over 8 percent provided normal trade relations with other countries, which if realized, would mark a return to growth after a modest contraction expected for 2017/18. (Exports had increased in the previous 5 marketing years.) Whole soybean exports, which are expected to increase 11 percent in 2018/19 over 2017/18, are responsible for the increased forecast in total soybean exports in 2018/19. Relatively small declines are expected in 2018/19 over 2017/18 in exports of soybean meal and oil—the principal components of crushed soybeans. Although soybean exports from the United States have grown over the past 25 years, the share of U.S. exports in global oilseeds trade has declined. Significant expansion in soybean output by countries like Brazil and Argentina have reduced the U.S. shares of global exports and production. Brazil surpassed the United States as the world’s leading exporter of soybeans in 2011/12 and is expected to exceed U.S. production for the first time in 2018/19. This chart is drawn from data discussed in the ERS Oil Crops Outlook released in May 2018.
Tuesday, December 12, 2017
Peanuts are expected to be especially plentiful in the 2017/18 marketing year, as record acreage of planted peanuts and high yields per acre are on track to produce the largest peanut harvest of all time. If realized, the 7.6 billion pounds of peanuts expected would exceed the previous record of 6.7 billion pounds in 2012. The 2017 forecast predicts a significant change from 2016 with 37 percent more peanuts produced. The projected growth is due to a 15-percent increase in yield per acre and a 19-percent increase in acreage harvested. The record production will likely mean a significant increase in peanut exports, which had already doubled since 2011. At the State level, record high yields are forecast in Georgia, Mississippi, and South Carolina. If realized, production in Georgia and South Carolina will be the highest on record. Georgia is the largest producer of peanuts in the United States and is responsible for growing roughly 50 percent of all the country’s peanuts. This chart is drawn from the ERS Oil Crops Outlook, released in November 2017.
Friday, August 4, 2017
Peanuts have always been a popular American food item, from peanut butter and jelly sandwiches to baseball stadium snacks. But not since 1991 have there been more acres of peanuts planted in the United States as there are now. The 1.8 million acres planted for the 2017/18 marketing year is the third highest on record. Since 2014, planted acreage has increased each year, after mostly trending downward for over 20 years. During that time, production did not fall due to increasing yields per acre, allowing farmers to dedicate less land to peanuts while maintaining steady output. The growth in acreage over the past 4 years has led to a sharp increase in the amount of peanuts on the market. If expectations are met, the 2017/18 peanut crop is expected to reach 6.45 billion pounds. This would only rank behind the 2012/13 record harvest of 6.75 billion pounds. Much of these gains have led to an increase in U.S. peanut exports, which have doubled since 2011. This chart is drawn from the ERS Oil Crops Outlook newsletter released in July 2017.
Thursday, June 29, 2017
To meet the increasing demand for agricultural commodities, forestland is frequently converted into crop fields or pasture, especially in developing countries. For example, deforestation in Argentina, Bolivia, Brazil, and Paraguay is linked with the production of soybeans (and beef). However, the majority of soybean production in these countries is consumed elsewhere, especially in China, the rest of Asia, and the European Union. Brazil and Argentina, the largest Latin American producers, exported an average of 67 percent of their soy production outside of South America. By contrast, the United States consumed 50 percent of its production and exported 44 percent of its production outside of North America. The soy product exported varied with the country. For example, Argentina exported about 8 million tons of soybeans and 22 million tons of soybean meal; by comparison, Brazil exported about 43 million tons of soybeans and 13 million tons of soybean meal. This chart appears in the ERS report International Trade and Deforestation: Potential Policy Effects via a Global Economic Model, released April 2017.
Monday, May 1, 2017
The latest projections for crop area plantings in 2017 indicate contrasting records for soybeans and wheat. Soybean plantings for 2017 are projected to reach 89.5 million acres, a new record-high. In contrast, forecast wheat plantings of 46.1 million acres would be a record low, if realized. Taken together, these planted area projections indicate that many farmers are switching from wheat to soybean production in several key wheat-growing States, including Kansas, Michigan, Nebraska, North Dakota, Oklahoma, South Dakota, and Texas. Since 2011, soybean acreage in these seven States has expanded by one-third, while wheat area has contracted. Farmers are likely responding to the higher prices and potential returns associated with soybeans, after multiple years of wheat prices trending lower. For the 2016/17 marketing year, the projected midpoint season-average farm-gate price for soybeans was $9.55 per bushel, slightly higher than the 2015/16 average of $8.95 per bushel. The all-wheat price for the 2016/17 marketing year is projected at $3.85 per bushel, more than a dollar below the 2015/16 season-average price and the lowest since 2005/06. This chart appears in the ERS Wheat Outlook report released in April 2017.
Tuesday, April 11, 2017
In 2016, soybean oil dominated the domestic use of edible oils and fats. Just over 50 percent of oil usage that year was sourced from soybeans. Interestingly, this is the lowest share of domestic use for soybean oil since at least 2003. Additional edible oils have grown in usage over this period. Canola, corn, and palm oils have each grown at a faster rate than soybean oil. Since 2011, canola, corn, and palm oil usage has grown 66, 57, and 21 percent, respectively. Over the same period, soybean oil use increased by 11 percent. The growth in canola oil consumption can be partially attributed to the thriving Canadian industry, which is the third largest producer in the world. The United States imported 1.9 million metric tons of canola oil from Canada in 2016, nearly half of the country’s total production. The growth of corn oil has been the result of expanded oil extraction from corn distillers grains and is likely primarily used for biodiesel fuel production. Global palm oil production has nearly doubled over the last 10 years and has resulted in a much larger export market, which has contributed to growing U.S. imports. Low prices at the wholesale level may help explain the appeal of canola and palm oil relative to other oils, but soybean oil remains the most price competitive. This chart is drawn from data in the annual ERS Oil Crops Yearbook tables updated in March 2017.
Monday, January 30, 2017
Oilseeds like soybeans, canola, and peanuts are strong substitutes for one another, particularly when used to produce cooking oils. As a result of their substitutability, their prices often move in similar directions. The rise in one oilseed’s price typically drives up the price of its alternatives. For example, if the price of soybeans increases, alternative oilseeds, like canola, would be more attractive to buyers. Subsequently, the price for canola would likely increase too. Prices for all major oilseeds have been moving steadily downward since peaking between 2011 and 2013. Data from the 2015/16 marketing year show that oilseed prices haven’t been this low since at least 2009/10. The price reduction for farmers is largely attributed to record domestic and global production of soybeans, peanuts, and other oilseeds in recent years. This chart is drawn from data discussed in the latest Oil Crops Outlook report released in January 2017.
Wednesday, October 26, 2016
In October, USDA raised its 2016/17 forecast of the U.S. average soybean yield to a record 51.4 bushels. Coupled with a harvested acreage estimate of 83 million acres, the higher yield boosts forecasted soybean production by 68 million bushels to 4.3 billion. The largest production gains are due to higher acreage and yield indications for North Dakota, South Dakota, and Illinois. These increases more than offset reductions in acreage and production for Minnesota, Iowa, and Tennessee. The 4.3 billion bushel forecast would be a record for U.S. production, while 2014/15 and 2015/16 production would become the second and third highest harvests, respectively. Much of the production gains are attributable to significant gains in yields which have increased from 38.1 bushels per acre in 2000/01 to 48 bushels per acre in the 2015/16 marketing year. Growing conditions for soybeans this year were nearly ideal. Spring planting for soybeans proceeded without any major delays. During the summer growing season, the Midwestern soybean-growing region benefited from much-above-average rainfall and there were no prolonged dry or hot spells to stress crops. Gains in production are leading to higher forecasted ending stocks and increases in exports, reducing downward pressure on domestic soybean prices. This chart uses data from the ERS Oil Crops Yearbook dataset and the ERS Oil Crops Outlook report released in October 2016.