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Corn+Soybean Digest

$12 soybean prices offer marketing opportunities

TAGS: Soybeans
$12 soybean prices offer marketing opportunities

November soybean futures remain well above $12 per bushel, even with price pressure much of last week. And $12 should be a strong foundation for getting much of the 2014 crop marketed, says Ed Usset, University of Minnesota grain marketing specialist.

“With new-crop soybeans at those levels (trading at near $12.40 Friday), I hope they’re getting something done,” Usset says. “Don’t wait too long and don’t get fancy. Try to determine a price you’re comfortable with. Most should be aiming to get half of their soybeans priced at hopefully above $12.”

Continued tight world oil seed supplies are keeping old-crop bean prices high. July 2014 soybean futures were trading in the $14.90+ range on Friday. They had hit $15.20 in mid-April.

That is substantially higher than the November contract, about a $2.50 per bushel difference. And it’s anyone’s guess as to when the wide price inverse will narrow, Usset says.

“I’m always nervous with these big inverses,” he says. “But it’s only late April. We could have a sizeable inverse for another couple of months. I’ve seen this thing carry into August.

“But it could collapse quickly. If I did a time frame, I would get really nervous the last half of June, assuming the crop appears normal. But inverses can go further than you ever imagined and can collapse quicker than you ever imagined.”

Usset says old-crop prices tend to “drag new-crop” up or down, so price volatility should be on farmer radars.

Along with tight supplies, old-crop prices are being supported by strong U.S. soybean exports.  Farm Futures reports that market-year soybean exports are nearly 4% more than what USDA has forecast and soymeal exports are nearly 90% of the annual forecast.

Darrel Good, University of Illinois ag economist, says in his most recent farmdoc report that foreign demand could generate even more U.S. bean plantings. “The large increase in soybean planting intentions reflects strong world demand for soybeans and the resulting high prices of soybeans relative to other crops, particularly corn,” he says. “As the planting season gets underway, the job of the markets is to direct final planting decisions of major spring-planted crops.”

More acres and good growing conditions could put pressure on those $12 markets. “If we assume a normal crop for 2014, there will be a good amount of soybeans around,” Usset says, again noting that it could be wise to get some beans sold at $12 or higher. “Then, farmers should hope they’re wrong and that’s the low.”

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