It sounds like a broken record, but soybean futures continue their downward slope. Good weather and projections for a big crop that will swell supply numbers are more than bearish on prices, notes Dan O’Brien, Kansas State University Extension ag economist.
The depressed futures prices were apparent when the August 2014 contract expired last week at $12.64 per bushel, a 25-cent drop from the previous day. The September contract closed Friday at $11.02. And new-crop November ended the week at about $10.51 after a mid-week rally of close to 15 cents.
“Right now, soybeans are still above $10,” O’Brien says. “But even with lower prices, prospects for prices at $10-something look better than corn at $3-something.”
Soybean production is forecast at a record 3.82 billion bushels, up 16% from last year, according to the Aug. 12 USDA crop production report. Based on Aug. 1 conditions, yields are expected to average a record high 45.4 bushels per acre, up 2.1 bushels from last year.
Harvested acres are pegged at 84.1 million acres, unchanged from June but up 11% from last year. USDA's 2013-2014 ending stocks of 140 million and 2014-2015's projection of 430 million were higher than trade estimates.
Brugler Marketing and Management reports that oilseed crush numbers announced Friday by the National Oilseed Processors Association show 119.62 million bushels were crushed in July, about 3 million more than trade estimates.
Bryce Knorr, senior editor of Farm Futures, a Corn+Soybean Digest sister publication, says that’s “enough to keep the pace well above the rate forecast by USDA for the 2013 crop.” That also means there is continued interest in old crop beans prior to the start of the new marketing year on Sept 1, Knorr says.
O’Brien notes the past week’s Extension outlook meetings in St. Louis didn’t see any big fears of problems impacting the crop. “Given the assumption we will have decent weather going forward, we’re not seeing any signals that we will have lower yields that will surprise the market,” he says.
Issues that may impact prices into 2015 include the continued strength of the Chinese demand for beans, as well as whether Brazil decides to plant more beans or corn.
“If the Southern Hemisphere cuts back on corn and plants a large soybean crop, then we’re looking at lower prices for sellers,” O’Brien says. “But don’t lose hope on the positive affect of low price can have on demand. Lower prices tend to favor usage.”