The acreage outlook for dry edible beans remains uncertain with early acreage expectations remaining fluid.Although current indications point to a modest decline in total dry bean area, very strong prices for several dry bean classes indicate they could experience moderate increases in seeded area. The U.S. aggregate dry bean grower price averaged $26.40 during 2007/08 and is expected to rise again in 2008/09.
Higher prices and a small gain in output pushed the farm value of the 2007 U.S. dry bean crop up 22 percent from a year earlier to $677 million - the highest since 1981 but well below the 1980 record ($737 million). The farm value of North Dakotas large crop was estimated to be $241 million - 36 percent of U.S. crop value and 55 percent greater than the previous high set a year earlier.
Outlook for 2008
In a winter scene likely to be replayed over the next several years, uncertainty reigns in the acreage outlook for dry edible beans. Early acreage expectations remain fluid, with growers presented with even more profitable choices than in 2007. Instead of the focus being just on field corn this year, projected net returns indicate that soybeans, wheat, barley, sorghum, and many classes of dry beans could each be very attractive cropping alternatives. Price strength remains broad for virtually all competing field crops but production costs for fuel, fertilizer, and seed are also ratcheting upward. The average marketing year price for field corn is projected to be about $3.65 in 2007/08up from $3.04 a year earlier and $2.00 two years ago. In 2008/09, corn is projected to continue rising as soybean plantings cuts into corn acreage. As a result, although dry bean prices have also risen, they have gained little on corn and lost ground to soybeans.
The dry bean/corn price ratio was 7.3 in 2006/07 and is expected to be about the same in 2007/08 and 2008/09. Although dry bean prices have kept pace with corn, both soybean and wheat prices have also hit record highs this year, placing even more pressure on potential dry bean area. The lack of substantive changes in the relative dry bean/corn price relationship is one indicator pointing toward small changes in total dry bean acreage this year and next. However, the aggregate dry bean price masks more substantial changes among bean classes. Marketing year average prices for cranberry, light and dark red kidney, Great Northern, small red, and navy beans are expected to be on the high end of the 2007/08 dry bean price range. As a result, a few of these classes could experience increases in seeded area of 10 percent or more.
Assuming lower acreage for such classes as pinto, black, blackeye, and garbanzo beans, U.S. dry bean seeded area is expected to drop percent from a year earlier. With average yields (which would be lower than last years trend-reaching performance) and average acreage losses, the 2008 dry bean crop would be at least 10 percent lower than the 25.4 million cwt of 2007. Although not necessarily a requirement, a smaller crop this fall would also make higher average dry bean prices (perhaps exceeding the 1988 record) during the 2008/09 marketing season a much safer bet. The first survey-based examination of 2008 row crop area (including dry beans) will be available on March 30 when USDA releases the Prospective Plantings report.
For 2008/09, grower revenue will undoubtedly benefit from the strong grower bids across most dry bean classes. This was certainly the case in 2007/08 as the marketing year average price for all dry beans rose 19 percent to $26.40 per cwt.Over the past 20 years, average North Dakota dry bean prices have risen one other time (1996) during a season which also featured an increase in production from a year earlier.
Grower Prices Advancing
Reflecting reduced supplies, tight holding of unsold stocks, and competitive pressure from higher-priced field crops, dealer and grower bids have remained strong since harvest and have crept higher across most dry bean classes. The U.S. aggregate grower price for all dry beans averaged 25 percent above a year earlier during the initial 5 months of the marketing year (September 2007 through January 2008). With the exception of blackeye and lima beans, grower bids for every major dry bean class averaged above a year earlier during September to January.
At the wholesale level, early February dealer prices for several of the major classes changed as follows:
"Pintos (CO), $36.00up 18 percent from a year earlier;
"Navy (MI), $39.25up 43 percent;
"Great Northern (NE), $44.50up 44 percent;
"Black (MI), $39.50up 27 percent;
"Light red kidney (MI), $57.00up 61 percent;
"Dark red kidney (MI), $57.50up 74 percent;
"Baby lima (CA), $43.25down 9 percent;
"Garbanzo beans (ID/WA), $39.50up 7 percent.
Market interrelationships force dry bean prices to reflect more than just the supply and demand factors within dry bean markets. Because of limited land and production resources, prices are now influenced by characteristics of markets that have little in common with dry beans, perhaps more so than at any time in the recent past. As a result, dealer prices may be forced to remain above long-term averages until either field crop prices ease or domestic dry bean supplies are bolstered. Barring unusually strong yields, imports may be the conduit through which these additional supplies enter the market. Imports are becoming a larger share of a few dry bean classes and foreign products may continue to grab an increasing share of the U.S. market. One question that arises is whether over the long run, some classes of U.S. beans will be priced out of the domestic market by being forced to maintain parity with elevated field crop prices.
Exports Down, Imports Up During the first 4 months of the 2007/08 marketing year (September-December), dry bean export volume declined 10 percent from the strong levels of a year earlier but remained even with 2 years earlier. Higher prices likely weighed down U.S. dry bean exports with average export unit values up 17 percent from the previous year to 31.3 cents per pound. Export performance was mixed by class with increases for dark red kidney, pink, large lima, cranberry, and Great Northern being outweighed by reductions for most other classes. Volume was down 43 percent for black beans and 10 percent for pintos due partly to higher prices and reduced demand from Mexico.
The leading destinations were Mexico (17 percent of total volume), Canada (13 percent), Zimbabwe (13 percent) and the United Kingdom (10 percent). Exports to Mexico (down 45 percent) and Canada (down 27 percent) each declined because of improved domestic supplies in those nations and sharply higher U.S. prices. Meanwhile, despite reduced chickpea volume, shipments to Spain rose 6 percent due to offsetting interest in U.S. Great Northern, dark red kidney, and cranberry beans. Exports to the United Kingdom (down 2 percent) and Japan (down 10 percent) also declined during the first 4 months of the marketing year.
Sharply higher prices for dry beans are drawing increased attention to the U.S. market from other bean-producing nations. Import volume from September to December rose 8 percent from a year earlier. Canada (40 percent of total volume), China (19 percent), Mexico (19 percent), and Thailand (4 percent) were the top import sources. Imports rose for pinto, black, and navy beans, but were lower for light red kidney, lima, and mung beans. Dry bean imports from Thailand consist mainly of mung beans but small amounts of several other classes were also imported. Dry bean import volume from Canada rose 54 percent while volume from China increased 37 percent from a year earlier. Despite a larger U.S. crop last fall, black beans were the single largest import class, with more than 12 million pounds entering over the first 4 months of the marketing year. China accounted for 55 percent of these black bean imports.
Canadian Market Analysis
For 2007-08, total production of pulses and special crops in Canada increased by 10% from 2006-07 to 4.51 million tonnes (Mt), based on Statistics Canadas (STC) November production estimates. Compared to 2006-07, average yields were lower for dry peas, dry beans, mustard seed, canary seed and sunflower seed, but higher for lentils and chickpeas. Crop abandonment was generally lower than for 2006-07 and lower than normal. Quality was generally lower than for 2006-07, but higher than normal.
Total supply decreased by 6% to 5.28 Mt due to lower carry-in stocks, causing exports, domestic use and carry-out stocks to decrease. Average prices, over all types, grades and markets, are forecast to increase from 2006-07 for dry peas, lentils, dry beans, mustard seed, canary seed, sunflower seed and buckwheat, but decrease marginally for chickpeas. The main factors to watch are currency exchange rates, ocean shipping costs and crop conditions in India, Pakistan, Mexico and the Middle East.
For 2007-08, production and supply decreased because of the 14% lower seeded area and lower yields. Production fell for all major classes of dry beans; white pea, pinto, black, dark and light red kidney, cranberry, Great Northern, pink and small red. Exports are forecast to decrease due to the lower supply. Carry-out stocks are expected to fall to a low level. U.S. production increased by 4% to 1.07 Mt, while supply increased only marginally to 1.22 Mt, as lower carry-in stocks offset most of the production increase. U.S. supply and, to a lesser extent, Canadian supply are the most important factors affecting Canadian prices. The average price, over all types and grades, is forecast to increase because of the lower total U.S. and Canadian supply.
Source: Vegetables and Melons Outlook/VGS-325/February 20, 2008, Economic Research Service, USDA