Louisiana Soybeans: Economics of Replanting

    Thin soybean stand. Photo: Mike Staton, Michigan State University

    Although there have been dry conditions in the south and wet conditions in the north, the 2020 planting season in Louisiana is off to a good start. The USDA National Agricultural Statistics Service reports 68% of the soybean crop in Louisiana has been planted, with 46% of the crop emerged as of May 10.

    The percent planted and emerged is ahead of last year and even to slightly ahead of the five-year average. The statewide soybean crop is rated as 96% fair to excellent. Hopefully, the forecasted heavy rains will not slow down the planting progress or cause damage to the planted acres.

    Severe weather, including heavy rains and tornadoes, hit parts of Louisiana in late April. There have been observations of poor soybean stands, including some acres requiring a replant. There have also been a few concerns of soybean stands resulting from poor seed-to-soil contact in cover crop and no-till systems.

    Economics is the most important aspect to consider when deciding whether to replant soybean. Factors that impact the economics of replanting are final plant stand, date of replanting, and the additional costs of seed and planting. Typically, mid-April- to mid-May-planted soybeans will produce the highest yields; planting later can result in yield loss.

    A thorough assessment of the final soybean stand should be conducted prior to replanting. Data from the LSU AgCenter suggest final populations of less than 70,000 to 75,000 may result in significant reduction in yield. In addition, inspect the fields for wide gaps where the soybean canopy will not close, as this can result in increased weed pressure, decreased soil moisture and potentially a decrease in yield.

    The economic impact on direct farm-level production costs from replanting soybeans can result in an increase in the number of bushels that will be required to offset the incurred production expenses associated with replanting field operations.

    The severity of this will depend on the type of soybean technology employed, as differences in the prices for seed, seed treatments and seeding rate can influence the replanting costs and, hence, the number of additional bushels required at harvest to offset those costs.

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    The following economic analysis employs a general farm management approach to calculate the breakeven yield required to cover the increase in replanting costs across alternative soybean price levels. Under the assumption that the farm’s yield is expected to be 55 bushels per acre, estimated total variable production costs for Roundup Ready soybeans under irrigation are $397.30 per acre.

    The breakeven yield under these imposed conditions is calculated to be 44.14 bushels per acre, assuming a $9.00 per bushel price. The breakeven price is calculated to be $7.22 per bushel. This can be interpreted to the extent that a producer would need to receive in excess of $7.22 per bushel to cover the total variable production costs per acre.

    Planting costs (machinery, fuel and labor) are comprised of a planter, tractor and seed. Planter costs are estimated to be $4.08 per acre in addition to the $65.00 seed cost to total $69.08 per acre. If a producer determines that a field must be replanted, the total variable costs for the growing season will increase from $397.30 to $466.38 per acre, reflective of the aforementioned replanting costs.

    Normal production conditions are assumed. The breakeven yield under these imposed conditions is calculated to be 51.82 bushels per acre, assuming a $9.00 per bushel price. This in an increase of approximately 8 bushels (7.68 bushels) per acre to offset the increase in production costs while the $9.00 price is held constant. The breakeven price is calculated to be $8.48 per bushel, an increase of $1.26 per bushel.

    When the market price is varied from $12.00 to $8.00 per bushel (yield of 55 bushels per acre held constant), it is observed from Figure 1 that as price decline, more production is required to cover the increase cost of replanting.

    economics Figure 1png

    Figure 1 that as price decline, more production is required to cover the increase cost of replanting. Click Image to Enlarge

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    Figure 2. The required increase in breakeven yields from replanting a 55-bushel-per-acre potential field across multiple price levels. As the soybean market price declines the required increase in breakeven yield also increases from 5.76 ($12.00 price) to 8.64 bushels per acre ($8.00 price). Alternatively, if a producer were to receive a discount on soybean seed, the required level of additional yield would decrease. The economic logic behind this is that a smaller increase in seed costs coupled with planting expenses ($4.08 per-acre) would require a smaller number of additional bushels being required to offset the increased costs. For example, is the seed is discounted 50%, the seed costs would be $32.50 per acre. When coupled with the replanting expenses, the discount would equate to a $36.58 per-acre cost compared to the $69.08 per acre expense under the first scenario. Click Image to Enlarge

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    Figure 3. The required increase in breakeven yields from replanting a 55 bushel per acre potential field across multiple price levels under the discounted seed scenario. As the soybean market price declines, the required increase in breakeven yield also increases from 3.05 ($12.00 price) to 4.57 bushels per acre ($8.00 price). Click Image to Enlarge




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