Week after week, U.S. soybean and soy meal exports remain well above last year and earlier USDA projections. As the charts illustrate, at the current pace of soybean exports, U.S. exports could end up at record levels and above the USDA projection of 1 billion bushels.

Soybean meal exports are likely to hit 3.8-4 million metric tons. South American farmers and the U.S. continue to grow huge crops that continue to get consumed.

China has been a huge growth area for both U.S. soybean and soybean meal exports. Domestic demand also continues to grow as additional soybean processing facilities are built.

“If demand is so good and exports keep growing, why do I have just $3.80 cash soybeans?” asked a frustrated Minnesota farmer in early January.

These are four key factors that are keeping U.S. and global soybean prices at rock bottom levels:

  1. The large South American soybean crop. This year, the total soybean crop in South America is likely to come close to the total U.S. soybean crop. With a huge supply of soybeans hitting the market every six months, end users have been successful in waiting to buy. The just-in-time crowd has saved a lot of interest and storage expense — and they have usually bought their soybeans, meal and oil at very low prices.

  2. The super-strong U.S. dollar. The expansion in Brazil has been a result of profitable soybean farming. Until the last six months, the weak Brazilian real has kept soybean prices at moderate profit levels in most of the key production areas of Brazil.

    Global oilseed buyers will often buy competing oilseeds throughout the world, avoiding U.S. soybeans that are priced in expensive dollars. The strong U.S. dollar is a double whammy: It helps out our competitors, and it sends our customers buying somewhere else.

  3. Improved yields because of better seed and farming technology. This increase in the U.S. and South America has kept a large supply of soybeans coming into the global marketplace. Not only are yields better than they were five to 10 years ago, they're also more consistent. It's amazing the yield central Corn Belt farmers had on soybeans last year, considering the late spring and hot summer.

  4. Freedom-to-Farm farm policy. The current soybean loan at $5.26 — and the large LDP payments that are made to U.S. soybean farmers each year — have U.S. farmers growing more soybeans, even when soybean futures are at 20-year lows. The old-market-works philosophy does not work when LDP payments of up to $1.30/bu are made to U.S. soybean farmers.

What to do?

For the frustrated Minnesota farmer, prices are likely to rebound and could get really exciting if any crop production problems develop in either the U.S. or South America, since the world now needs two large crops each year.

Until then, do what you can to get the maximum yield possible and learn how to maximize LDP payments. Make the right marketing and merchandising decisions. For all soybean farmers, it's important to focus on $/acre — not $/bu.


Alan Kluis is executive vice president of NorthStar Commodity Investment Co. If you have marketing questions or want more information, write: NorthStar, 1000 Piper Jaffray Plaza, 444 Cedar Ave., St. Paul, MN 55101; call: 800-345-7692 or e-mail: aginvestor@agmotion.com.