Dry Bean Markets in Quandary
January 24, 2007
Production and stocks are down, exports and prices are up, yet intense competition with other crops for acres could mean a decline in U.S. dry bean acreage in 2007, unless buyers ratchet up new crop bids before spring.
The 2006 U.S. dry edible bean crop was estimated to be 23.8 million cwtdown 11% from 2005. Although harvested area was down just less than 1%, hot, dry weather in most major states impacted crop development and yield potential. As a result, national per-acre yield averaged 15.6 cwt, down 11% from a year earlier but 7% above the freeze-impacted low of 2 years ago.
Nebraska, the third leading producer, dry bean yields were reduced 4% by an early frost.
N.D. leads production: In N.D., again the leading state with 32% of the 2006 crop, production declined 11% to 7.62 million cwt. Crop conditions in Michigan, the second leading State in 2006, were favorable for dry beans until late in the harvest season, with state yield rising 6% to 18.0 cwt per acre. In
lima, light red kidney, and small red beans (table 1). Output of Great Northern beans fell 26% in 2006, as an early frost in Nebraska reduced yields 12%.
The first estimate of dry bean production by class was released by USDA on Dec. 11. Production of 10 of the 15 identified bean classes fell below a year earlier, with the biggest percentage declines for large
Pintos leading bean class: A combination of less harvested area and reduced yields pulled the pinto crop down, but pintos easily remained the top bean class with 40% of the 2006 crop. Pinto bean harvested area was down 10% to 651,700 acres, while average yields dropped 15% due largely to the hot, dry summer. Pinto output was down in 11 of the 14 producing states, with N.D., the leading producer, down 25% to 4.91 million cwt.
Output of pinto beans declined 34% in Nebraska, the second-leading producer, largely because of a 31% cut in harvested area. Growers in Colorado produced 8% fewer pintos as a 20% reduction in harvested area outweighed a 15-percent gain in yield. Pinto yield in Colorado was second only to the 2002 record.
Pinto prices likely to strengthen: As pinto bean stocks are drawn lower this season, grower and wholesale prices are likely to continue strengthening. Grower prices (CO/NE) began the marketing year in September at $17.67 per cwt, up 20% from a year earlier. With limited open market activity, grower bids in North Dakota-Minnesota had climbed to $19.50 by mid-December, up 40% from a year earlier (see table 2 for historical comparison of production, area, and price).
Navies, blacks, and other classes: Although the total dry bean crop was lower, several bean types managed to post increases in 2006. Production of navy beans, the second-leading dry bean class, increased 6% as output was higher in both N.D. (up 19%) and Michigan (up 9%).
Output of black beans also increased, led by greater harvested area in the 2 leading states, Michigan and N.D. This was the largest black bean crop since 2002, reflecting stronger demand and higher prices over the past year. With higher prices encouraging larger planted area in several states, the garbanzo bean (small and large chickpeas) crop was the largest since the 2001 record high. Large kabuli chickpeas accounted for 90% of the total garbanzo crop. Despite a record-large crop, prices in the chickpea/ garbanzo market remain relatively strong, reflecting good domestic and world demand.
Price competition with other crops: With stocks of several dry bean classes likely to be low by next summer, reduced supplies and higher prices over the coming marketing year would normally be an automatic indicator of a significant increase in area planted next spring.
However, dry beans may face a substantial challenge in the coming year from traditional rotational crops such as corn, soybeans, barley, and wheat. Prices for these grains have risen greatly over the past few months due in part to strong demand for field corn by a rapidly expanding ethanol industry. Fundamentals in the corn market set the tone in many agricultural crop markets. Field corn is running at more than $3.00/bushel, wheat over $4.50/bushel, soybeans over $6/bushel, and oil sunflowers about $15/cwt., all well above a year earlier and their long-run averages.
Although dry bean prices have risen (see table 3, 2006 vs 2005, and figure 1) they are currently uncompetitive with most of these alternative crops. This suggests that in the absence of changes in commodity price relationships this winter, U.S. dry bean acreage could decline 10-15% in 2007. Assuming that yields return to either trend or their long-run average, the decline in U.S. dry bean production would be less than the percentage reduction in area.
Fall exports up: U.S. dry edible bean export volume for the initial 2 months of the 2006/07 marketing year (Sept-Oct) increased 24% from a year earlier (table 4). Export gains were led by pinto, navy, and black beans. The top destinations were Mexico, Japan, Cuba, and the United Kingdom.
Pinto bean exports up 114% in 2005/06: Pinto bean exports were strong in 2005/06, rising 114% to 2.64 million cwt. This strength has carried over into the first 2 months of 2006/07, with pinto volume up 31% from the same time a year ago. A large shipment to Cuba in September and increased movement to Mexico pushed pinto bean exports higher. With prices likely to rise in coming months due to tighter supplies, pinto bean exports are expected to decline.
Navy exports up as well: Navy bean export volume has been trending lower since the late 1990s, but managed to increase 6% from a year earlier during 2005/06. During the first 2 months of 2006/07, volume is up 28% with increased movement to Canada and Mexico outweighing reduced movement to the United Kingdom. Exports accounted for about 19% of the disposition of 2006 supplies, down from 21% in 2000 and 24% during the 1990s.
U.S. bean imports rise: Imports (excluding guar seeds) during September-October were up 20% from a year earlier, led by black (up 123%) and black gram/urd (up 68%) beans. Greater dry bean import volume from Mexico (up 24% and China (up 26%) was likely driven by dwindling preharvest supplies and increased wholesale prices in the U.S. dry bean market.
During September-October, the producer price index (PPI) for canned dry beans was up 6% from a year earlier, while the PPI for dry pinto beans was 15% above a year earlier.
Dry bean market data courtesy Gary Lucier, USDA ERS economist. See more U.S. dry bean market information in the USDA ERS Dry Bean Briefing Room online: