Soybean futures prices dropped to 27-year lows in the summer of 1999 as a combination of negative market factors combined to bomb prices lower. Many producers are concerned that soybean prices will drop down to test that low or make new lows again this fall. These producers may fall into the trap of forward selling too many soybeans at or below their long-term cost of production. Anything is possible, but odds are good that prices will at least give you a chance for higher fall bids than you had available last year.

There are four major positive factors that suggest higher prices ahead:

1). Global ending stocks will drop by 120 million bushels this year due to smaller crops in China, India, South America and the U.S. The stocks-to-use ratio, which was as high as 15.5% last year, has dropped to just 13.5% in recent reports.

2). La Nina has hurt soybean yield potential in South America and may limit U.S. yields. If you view a Palmer soil moisture index map, you'll see some of the driest conditions of the last 30 years in the major corn and soybean production areas of the U.S. It will take timely rains and ideal growing conditions to achieve a trendline or better U.S. yield.

3).Global demand continues to increase, and U.S. exports are now running 70-80 million bushels above last year's pace. The combination of increased livestock numbers in the U.S. and a booming economy in Southeast Asia are very positive for soybean demand.

4) Historical studies show that we are currently at the low end of the trading range for the last 10 years. Review the November soybean 10-year highs and lows (see printed article).

Last year the early sales made the most money, but with the Commodity Research Bureau index and energy futures signaling an uptrend in commodity prices, you'll want to use different timing for selling your soybeans this year.

What you should do. The (see printed article) that November soybean futures usually have a trading range of $1.80/bu. The smallest trading range (high to low) in the last 10 years was $1.17/bu. If you assume that November 2000 Chicago Board of Trade soybean futures contracts made a major low at $4.53, then the first objective for a high is at $5.70. A $1.80 rally from low to high would suggest a rally to $6.33. Write these figures down now, before any weather-scare rally develops.

All soybean producers are eligible for the $5.26 national soybean loan. Therefore, for those who have a 30-50cents/bu new-crop basis, it will take a rally to $5.70 or higher to put any risk in not pricing new-crop soybeans. Put your offers in place and be patient.