Strong export and crush demand and a tighter-than-expected supply report from the Agriculture Department on Oct. 9 should mean an improving price picture for soybeans, according to Terry Francl, senior economist with the American Farm Bureau Federation.
“I see a real potential upside for soybean prices after the harvest is complete,” Francl said. Already soybean export sales for the current crop year are equivalent to almost 60 percent of projected annual exports, double the average for this time of year.
USDA’s October crop report forecasts soybean production at a record high 3.35 billion bushels, up 10 percent from 2008. Based on Oct. 1 conditions, soybean yields are expected to average 42.4 bushels per acre, up 2.7 percent from 2008. If realized, this will be the third highest yield on record. Growers are expected to harvest 76.6 million acres of soybeans, which is the largest area on record.
However, Francl said disease and harvest delays due to wet weather in many areas could potentially reduce the USDA soybean production estimate in future months. This coupled with the strong export demand, may also produce a strong post-harvest recovery for soybean prices.
USDA is also forecasting a near record corn crop with production pegged at 13 billion bushels in the October report, up 8 percent from last year and just 0.2 percent lower than the 2007 record. The lagging corn maturity and potential frost damage could have some impact on yields, according to Francl.
“However, I don’t think the impact on yields will be that great,” Francl said. “But this will likely result in higher drying costs for farmers and the potential for lower quality grain and price discounts. Given the lagging corn maturity and the recent rains, the corn harvest may well run right up to Thanksgiving and maybe even into December for the northern states.”