2008 soybean crop needs more time to mature

By ANDREA JOHNSON, Assistant Editor
Friday, August 29, 2008 11:25 AM CDT

Like the corn crop, the 2008 U.S. soybean crop needs more warm weather for maximum yield.

The worry over the late soybean crop is one factor that recently took soybean prices higher.

As of Aug. 17, Iowa soybeans reached 80 percent setting pods, compared with 94 percent on average, Illinois soybeans were 70 percent setting pods compared with 89 percent, and Indiana was 61 percent setting pods compared with 82 percent for the five-year-average.

Betsy Jensen, Northland Community & Technical College grain marketing instructor, encourages producers to follow along with the USDA's Monday crop progress reports.

“Certainly it is not perfect growing conditions in the Corn Belt,” Jensen said. “When you factor into that the percentage behind schedule that the crop is blooming and setting pods, the soybean crop is not a slam dunk yet by any means. The crop scare is still very strong in the soybean market.”

On the Chicago Board of Trade, soybean futures traded on Aug. 22 shortly before the close with the September contract at $13.14, November at $13.20, January at $13.34, March at $13.50 and May at $13.55 per bushel.

Compared with prices on Aug. 8, the contracts were about $1.28 per bushel higher.

The Chicago Board of Trade website for Aug. 22 said prices turned lower early on with reports of a stronger dollar and lower crude oil prices.

Traders then became more concerned about U.S. soybean ending stocks pegged at 135 million bushels.

If the U.S. produces a 2.93 billion bushel soybean crop, as estimated by the Pro Farmer tour, instead of a 2.973 billion bushel crop as estimated by the USDA, 2008-2009 ending stocks drop to 93 million bushels.

“Soybeans stocks of already 135 million bushels is it,” Jensen said. “We are down to nothing left for soybeans at the end of the year. We would be very reliant on South America for a huge crop to offset the world markets.”

Argentina continues to experience political strife between the farmers and the government.

The Chicago Board of Trade website indicated that northeast China is reporting lower levels of rainfall than expected. Jensen added that it looks like China will continue with large soybean purchases following the Olympics.

Rain across much of the Corn Belt was also not considered sufficient in late August.

“Tropical Storm Fay is expected to bring us some moisture, but the Corn Belt is a little on the dry side,” Jensen said.

At one elevator in western Minnesota followed in this column, cash soybeans on Aug. 22 were $12.40 per bushel with a basis of 80 cents under. Compared with the price on Aug. 8, soybeans were $1.47 higher and the basis had narrowed by 8 cents.

Jensen was surprised to see the soybean basis tighten ahead of harvest.

“I think the markets want to entice farmers with a little bit of a better basis,” she suggested.

She added that the USDA has left soybean demand levels alone. The federal agency has made changes to corn demand.

“The soybean demand seems to be a lot more stable than corn demand,” she said. “If we have lower yields, how high will prices need to go before we start rationing demand? That is a question we will probably find out this winter, if we have a yield problem.”

Jensen pointed out that even as the corn or soybean farmer may be enjoying good profits, the livestock farmer is facing very tough times. Hopefully the volatility in the soybean and corn market will continue and livestock growers can lock in some feed purchases at acceptable levels.

Soybean farmers are also looking for volatility to reach some price targets.

Jensen works with grain marketing clubs in northwest Minnesota. Some individuals in those clubs have set price targets and are making soybean sales.

For the last 2008 soybean sales, Jensen would encourage producers to use technical indicators, such as following along with the moving average to make decisions about when to sell.

“If you have lots left to sell, I would say price targets are still an excellent way to go,” she said. “If you are getting down there and you are on the final few sales, I would start using a moving average.”

Comments »

Comment on this story

Comments will be approved within 48 hours

Name:

Email: (optional)

Comments:

Image Verification: (Case sensitive)