Bean Market Outlook
March 30, 2009
Sharply higher prices pushed the farm value of the 2008 U.S. dry bean crop up 30 percent to $975 million - the second-consecutive record high. The farm value of North Dakotas crop was estimated to be $315 million 32 percent of U.S. crop value and 14 percent above the previous high set in 2007.
Outlook for 2009
As was the case a year ago, much uncertainty remains in the acreage outlook for dry edible beans with growers again presented with several profitable choices (depending on growing region). Although price strength remains broad compared with past years for virtually all competing field crops, prices are currently lower than the unusual highs of a year earlier and full of uncertainty. In addition, production costs could also average slightly higher in 2009 despite lower fuel and fertilizer prices. Thus, projected returns above direct costs will not be as strong as a year earlier for most crops, although they remain much higher than pre-2006 levels. To this point in the season, although weakening, the aggregate dry bean price remains above that of a year earlier. However, the aggregate dry bean price masks changes among bean classes. Marketing year average prices are expected to be lower for pinto, navy, Great Northern, and garbanzo beans but could be higher for light and dark red kidney, baby and large limas, small red, and pink beans.
In January, the preliminary all-dry-bean price averaged 32.3 cents per pound, up 18 percent from a year earlier. In December, the price was 28 percent above a year earlier. The average field corn price was up 4 percent from a year earlier in January, while soybeans were little changed. The ratio of dry-bean-to-corn prices was 7.8 in January compared with 6.9 a year earlier - favoring dry beans this year. Also, the dry bean/corn price ratio is expected to rise in 2008/09 following 2 consecutive declines. The declines in the ratio in 2006/07 and 2007/08 coincided with reduced dry bean area in 2007 and 2008. If this relationship holds, the projected increase in the price ratio for 2008/09 would be an indicator of increased dry bean acreage this spring. However, weakening of dry bean prices or stronger corn prices in the next several months could soften any changes to dry bean area.
Other evidence suggesting a possible increase in dry bean area this spring includes the current attractive returns over direct costs for dry beans compared with a number of crop alternatives. While the average marketing year dry bean price is projected to be $00.00 in 2008/09 (up from $28.80 in 2007/08), the average price for field corn is currently projected to be about $3.90 in 2008/09 - down from $4.20 a year earlier and $3.04 two years ago. In 2009/10, the corn price could decline slightly again given a high degree of uncertainty over demand strength and area to be seeded.
Assuming increasing acreage for such classes as pinto, kidney, lima, and black beans, U.S. dry bean seeded area is expected to rise 5 to 9 percent from a year earlier. With average yields (which would be about 4 percent below last years record-high 17.68 cwt) and average acreage losses, the 2008 dry bean crop would come in around 26 million cwt - just above that of a year earlier. The first survey based examination of 2009 row crop area (including dry beans) will be available on March 30 when USDA releases the Prospective Plantings report.
For 2009/10, grower revenue is expected to recede from the strong 2008/09 performance. The preliminary marketing year average price for all dry beans rose 31 percent to $37.70 per cwt in 2008/09. With production little changed from a year earlier, the farm value of the 2008 dry bean crop jumped 30 percent to a record $975 million - the second consecutive record high. The farm value of North Dakotas crop was estimated to be $315 million - 32 percent of U.S. crop value and 14-percent above the previous high set in 2007. Minnesotas crop value was a distant second at $139 million (up 83 percent from a year earlier), while Michigans dry bean crop had a farm value of $137 million - up 38 percent from 2007 but well below the states 1980 record high of $205 million.
Grower Prices Mixed
Reflecting below average world supplies, tight holding of unsold stocks, and competitive pressure from high-priced field crops, dealers and growers have largely resisted the downturns which have affected most commodity markets over the past several months. Although price discovery remains problematic with thin sales for many classes, some weakness has been noted over the past few weeks for classes such as pinto, navy, and small red beans. This has been noted in the all-bean price which peaked at $40/cwt in October before declining to $32.30/cwt in January. The U.S. aggregate grower price for all dry beans averaged 35 percent above a year earlier during the initial 5 months of the marketing year (September 2008 through January 2009). Although the markets were thin, 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), $40.75 - up 4 percent from a year earlier;
- Navy (MI), $35.50 - down 11 percent;
- Black (MI), $45.50 - up 13 percent;
- Small red (ID/WA), $50.00 - up 2 percent;
- Light red kidney (MI), $50.00 - down 12 percent;
Baby lima (CA), $58.25 - up 37 percent;
- Garbanzo beans (ID/WA), $37.50 - down 6 percent.
During the first 4 months of the 2008/09 marketing year (September-December), dry bean export volume jumped 32 percent from a year earlier - the strongest start to the dry bean export season since 2000. Volume was up despite an 18 percent increase in the average export price to 37 cents per pound. With both higher prices and rising volume, the value of dry bean exports during this period leaped 55 percent to $128 million - the highest for the first 4 months since 1990. As usual, export performance was mixed by class with increases for black, pinto, light-red kidney, small red, and navy (pea) beans easily outweighing reductions for most other classes. Volume was up 160 percent for black beans and 47 percent for pintos due largely to increased demand from Mexico. Navy beans jumped 84 percent due to increased sales to Canada, the United Kingdom, and Mexico.
The leading destinations for U.S. dry beans were Mexico (21 percent of total volume), Canada (16 percent), the United Kingdom (12 percent), and South Africa (11 percent). Exports to Mexico (up 62 percent) and Canada (up 57 percent) each increased despite higher U.S. prices because of reduced domestic supplies in those nations and a more favorable exchange rate. Although pinto exports to Mexico were little changed from a year ago, the volume of black, navy, light-red kidney, and mung beans were higher. Meanwhile, greater movement of pinto beans to South Africa, Tanzania, Central America, and Europe boosted volume above a year earlier. Exports to Spain declined 23 percent due mostly to a reduction in chickpea sales during the first 4 months of the marketing year.
With world supplies tightening during the first 4 months of the marketing year, U.S. dry bean import volume was up just 5 percent from a year earlier despite sharply higher prices. Canada (35 percent of total volume), Mexico (14 percent), China (13 percent), and Peru (12 percent) were the top import sources. Imports rose for garbanzo, mung, and light-red kidney, but were lower for black and navy beans. Volume brought in from Canada (down 8 percent), Mexico (down 22 percent), and China (down 27 percent) declined, while volume from Peru (up 210 percent), Nicaragua, and El Salvador increased.
Fewer U.S. Farms Grow Dry Beans
The recently released 2007 Census of Agriculture indicated there were 6,236 U.S. farms harvesting dry beans (excluding dry limas which were produced by 167 farms), down 28 percent from the 2002 census. In comparison, the number of farms growing field corn changed little, while those producing dry edible peas surged 97 percent between 2002 and 2007. Dry bean production also became more concentrated on larger operations between 2002 and 2007. In 2007, 46 percent of the U.S. dry bean crop was produced by farms growing 500 acres or more, up from 36 percent in 2002. About 13 percent of all farms reporting dry bean acreage harvested at least 500 acres of dry beans in 2007, compared with 9 percent in 2002. The share of harvested acres that were produced under irrigation declined from 34 percent in 2002 to 24 percent in 2007 as area became more concentrated in the lightly irrigated upper Midwest.
In North Dakota, the top producer, there were 16 percent fewer farms with dry beans in 2007. However, a greater share of national dry bean farms were in North Dakota in 2007 (27 percent) than in 2002 (23 percent). The number of farms growing dry beans in Michigan, the second-leading producer, declined 25 percent to 1,183 - 19 percent of the national total. Partly reflecting the continued concentration of the industry in fewer States and on larger farms, the number of farms producing dry beans declined heavily in New York (down 53 percent), Colorado (down 59 percent), and California (down 38 percent).
Source: Vegetables and Melons Outlook/VGS-331/February 25, 2009, Economic Research Service, USDA
Canada: Pulse and Special Crops (P&SC) Outlook
For 2008-09 to date, prices for most P&SC in Canada, with the exception of dry peas and canary seed, have risen from 2007-08 due to relatively tight supplies. Total Canadian exports for all P&SC are forecast to fall marginally due to the world economic slowdown. Carry-out stocks are forecast to rise for most crops. For 2009-10, total area seeded to P&SC in Canada is forecast to be unchanged from 2008-09, with decreased area for dry peas and dry beans, and increases for chickpeas, lentils, mustard seed, canary seed and sunflower seed. Average yields are generally expected to decrease from 2008 and trend yields are assumed for both western and eastern Canada. Total production in Canada is forecast to fall by 6% to 5.0 million tonnes (Mt). Total supply is expected to rise marginally to 6.3 Mt, as higher carry-in stocks more than offset the fall in production. Exports, domestic use and carry-out stocks are forecast to rise slightly due to the higher supply. Average prices are generally forecast to fall but remain unchanged for chickpeas and canary seed. The main factors to watch are commodity prices and input costs, precipitation in Canada over the winter, the Canada-U.S. dollar exchange rate, the impacts of the world recession and planting progress in major producing regions, especially the Indian subcontinent, United States, European Union, Australia and the Middle East.
For 2008-09, exports are forecast to decrease from 2007-08 due to lower supply. Carry-out stocks are expected to rise marginally. The average price, over all classes and grades, is forecast and Canadian supply.
For 2009-10, the area seeded is forecast to fall marginally from 2008-09 because of good prices for crops which are easier to produce than dry beans.
Production is expected to rise as a result of a return to average yields. Supply is forecast to rise marginally. Canadian exports are forecast to rise due to the higher supply and carry-out stocks are expected to rise marginally. The average price is forecast to decrease because of the higher U.S. and Canadian supply.
For 2008-09, exports are expected to be lower than 2007-08 due lower supply. The average price, over all types and grades, is forecast to decrease marginally. Carry-out stocks are also expected to decrease.
For 2009-10, the area seeded is forecast to rise sharply from 2008-09 because of low carry-in stocks and relatively high prices compared to many alternative crops. Production is expected to rise, but supply is forecast to fall slightly from last year as the higher production is more than offset by lower carry-in stocks. World supply is forecast to rise marginally to 9.3 Mt. Canadian exports are forecast to rise and carry-out stocks are expected to fall to a low level. The average price is forecast to remain unchanged as lower Canadian supply is offset by higher world supply.