Soybean demand remains strong as projected soybean crush and export numbers continue to exceed 2014 levels, helping keeping bean markets from falling lower. But political policy in China, the world’s largest user of soybeans, could quickly swing bean markets up or down, said Scott Irwin, University of Illinois (U of I) agricultural economist.

CME Group soybean futures prices continue on a downward trend. November 2015 soybeans closed Friday at $9.52 per bushel, 9¢ lower than Thursday. Old-crop futures prices were also down. Farm Futures says big soybean harvests in South America and the Brazil truck strike (even though weaker than expected) helped generate the decreased prices.

However, Irwin says prices are higher than expected. “Soybean prices are stronger and corn prices are weaker than I would have thought,” Irwin told Corn+Soybean Digest on Friday. “The key thing is whether the overall demand for soybeans continues to be as buoyant as it appears to be in the face of pretty daunting fundamentals (high soybean stocks and planted acre projections).

“I think the answer is in China’s internal policies on strategic reserves of soybeans. That has to be a huge swing factor in world soybean markets.”

U of I’s Farmdoc program notes that USDA’s projected domestic soybean crush for the current marketing year is 3.5% larger than last year’s crush. “The pace of the domestic crush in September 2014 was very slow as the result of limited supplies of old crop soybeans and the slow start to harvest,” Farmdoc reports.

“The pace has accelerated since then and crush estimates from the National Oilseed Processors Association indicate that the cumulative crush during the first seven months of the marketing year (September 2014-March 2015) was 1.3% larger than the cumulative crush of a year earlier.  The crush during March 2015, however, was 5.8% larger than in March 2014.” 

In addition, Farmdoc says exports of soybean oil and meal could exceed current USDA projections. “USDA projects a 1.2% year-over-year increase in soybean oil exports and a 10.8% increase in soybean meal exports,” Farmdoc says. “Cumulative soybean oil shipments plus outstanding sales as of April 9 exceeded those of a year ago by 12.7%.  Soybean meal exports plus outstanding sales were up 13.4%.”

Irwin notes that dry weather in northern states could impact soybean production and price. “Extreme dryness has developed in South Dakota, southwestern Minnesota and southeastern North Dakota,” he says, pointing out that these areas have seen a shift to more soybeans in recent years. “The area has been left untouched by recent Midwestern rainfall. That’s something that bears monitoring.”

Farm Futures encourages growers to keep an eye on upcoming planting reports. “The first soybean planting report of the season lands on Monday,” says Bryce Knorr, Farm Futures senior editor. “A year ago 3% were planted and five-year average was at 4%.”