May 2, 2008

 

Lack of quality seeds may affect switching from corn to soy in the US 

 

 

Lack of quality soy seeds are causing producers to stick to their corn planting intentions even as corn planting is lagging behind the average pace because of wet conditions.

 

Corn planted after May 10 normally means reduced yields, leading many producers to opt for planting soy in fields unable to be seeded with corn by the deadline, analysts said.

 

However, high corn prices continue to offer an incentive to keep planting corn even when yields are low.

 

With tight supplies of soy seeds the opportunity to switch from corn to soy may not be a viable option in 2008, said Bill Nelson, grains analyst with Wachovia Securities in St. Louis.

 

"It's been really tough to fill invoices for quality soy seeds placed in the winter," said Brent Floyd with Pioneer Hybrid in Elwood, Ind. "Bean seed supplies are definitely tight in Indiana, I can't speak for the entire corn belt, but I just don't see a wholesale switch to soy from corn, due to this issue," Floyd said.

 

Germination rates on soy seeds are usually 90 percent or better, but this year there will be seeds sold tagged with 75 percent germination, as adverse weather late last summer and in the fall affected seed coats and forced seed companies to use more soy to make quality seeds this year, he added.

 

The quality of soy seed is measured by the germination percentage, or the number of seeds per 100 that are viable. Most years, soy have germination rates above 90 percent, with 80 percent being the standard.

 

"With soy seed quality down, the western corn belt will be pushing corn plantings, and with more corn seed availability and quality, the eastern corn belt could see increased corn plantings," said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

The limited availability of quality soy would subject some producers to plant soy seeds that can't get more than 50 percent germination if they switch from corn at a late date, Zuzolo added.

 

There were two issues that affected soy seed supplies, said Palle Pederson, extension agronomist with Iowa State University. First there were mechanical demands, with combining in hot temperatures in the south damaging soy seed coats, while pathogens affected seed coats farther north in Iowa, he added.

 

Still, high corn prices will likely encourage more planting, if the weather cooperates.

 

"I don't see farmers abandoning corn plantings in favor of soy with US$6.00 corn and there is still another two weeks before farmers in the key corn producing states of Iowa and Illinois begin to start worrying about yield losses," said Pederson.

Arkansas and Kentucky are facing corn-planting issues where corn needs to be sown within two weeks to avoid being exposed to hot Southern temperatures during pollination.

 

The issues of seed quality were raised in December and January, where late-season dryness in 2007 produced lower soy yields, particularly in the U.S. Delta, said Nelson.

 

Large overall increases in planting intentions raised demand for soy seeds, which will not allow for a late switch from corn to soy in many areas, Nelson added.

 

However, the market is telling farmers to stick with corn plantings, as the spread ratio for November soy/December corn closed at 1.95 to 1 Wednesday, providing an economic incentive to plant corn, said Zuzolo.

 

Historically, soy prices trading at a 2.4-to-1 ratio to corn would make it more profitable for farmers to plant more soy acres. When the ratio was below 2.0, it was a sign for more corn, analysts said.

 

The ratio is a handy guide, but many other issues will influence farmers' decisions.

 

Seed quality is an issue in the southern Midwest and Delta, amid reports that soy seeds are sold out, which places increased pressure on producers to get their corn crops seeded quickly, analysts said.

 

US corn planting was 10 percent complete as of Sunday, up from 4 percent last week but below the average of 35 percent, according to the USDA. In Kentucky corn seeding was reported at 31 percent, down from its average of 64 percent, and Missouri planting stood at 8 percent, off its average of 66 percent.