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Are soybeans headed for $10?

Are soybeans headed for $10?

Soybeans have taken a one-two punch right to the chin. First was the left handed jab that landed when the USDA delivered a stock number of 405 million, well north of most all trade estimates which were around 375 million. My guess is the USDA found an additional 40-60 million bushels somewhere and that spring imports were perhaps larger than the trade was anticipating.

That news was immediately followed by a jaw breaking right handed upper cut that brought the market straight to it's knees. In case you missed it, the USDA delivered the haymaker by reporting that 84.839 million acres of soybeans will be planted. For those of you scoring the fight at home this is 3.3 million acres higher than their previous estimate and 8.3 million more than the 76.53 million acres we planted last year. This also blows away the previous US record of 77.45 million soybean acres planted back in 2009.

Harvested acres are now estimated at a whopping 84.058 million. Take the harvested number and multiply it by the estimated 45-bushel-per-acre yield and we are looking at around a 3.783 billion bushel crop.

In other words, it was a wildly bearish report and certainly an acreage number that caught me by surprise in a major way. I had a hard time believing the bearish rhetoric of 83 million not alone a number that could end up well beyond 85 million before it's all said and done.  Keep in mind the survey ended in mid-June and many filled them out and sent them back in early June, meaning the severe rain and storms that forced more producer to turn in corn seed and substitute soybeans may still not be totally  accounted for... I hate to say it, but soybean acres could get even larger from here.  The other kicker is yield. What if yield comes in better than 45 bushels per acre? All of a sudden we are looking at ending stocks of 400-500 million bushels and the trade taking about sub-$10 soybeans.  Make certain you are paying close attention and fully understand where the "puck" could be headed.  This is exactly why I elected to have 70% of our estimated production priced at much higher levels. Looking back now I obviously wish I would have done more, I just hate to get too far out ahead of myself before the seed is even out of the bag.    

Read my daily report.

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