Farm Progress

Soybean Price Volatility Spills Over Into New Year

Larry Stalcup

January 9, 2013

2 Min Read


When the big ball dropped in Times Square to usher in 2013, it resembled the path of soybean and other grain prices that began the year tumbling down. Price volatility – up one week, then down the next – is the new normal. Looks like it’s here to stay. November 2013 soybean futures, which closed at $12.84/bu. Jan. 7, saw a $3/bu. swing from June to early September, a $150/acre swing in return for a 50-bu. crop. They jumped from $11.40 to near $14.40.

The futures contract sunk to $13.60 by early November, plunged even more to $12.60 in mid-November, rebounded to $13.40 in early December before making its most recent skid. Beans dropped over 35¢ last week alone.

Still, the $12.80 range is above likely breakevens, so some early 2013 marketing considerations may be in order, along with preparing for crop insurance. Margins will likely remain tight, so knowing your breakeven levels heading into the new year is essential in knowing when to price soybeans and other crops.

“Farm operators need to look for ways to control crop expenses for 2013, as well as put together a good grain risk management plan that uses crop insurance and sound grain marketing strategies in order to achieve breakeven and profitable price levels for the coming year,” says Kent Thiesse, Minnesota ag lender and risk management contributor to Corn & Soybean Digest.

Although all farms have different production costs, Thiesse says the breakeven cost of producing soybeans will be near $12/bu., compared to near $8 as recently as 2008.

A key reason behind price declines toward the $12 level is that end users are thinking twice about their purchases.

“The extended period of higher corn and soybean prices in 2011 and 2012 has slowed demand for feed usage, biofuels production and for exports, which could put further pressure on grain prices in 2013,” Thiesse says.

With a still unstable world economy, price pressure could continue on soybeans. Domestically, cattle feeders and pork and poultry producers continue to either lose money or barely breakeven.

Then again, the Corn Belt is not out of the woods from the drought, as many regions failed to receive substantial moisture in the fall. If the drought continues into this growing season, prices could be higher.

But if normal weather patterns return, and there are bumper crops headed to bins this fall, soybean floor prices could be much lower. Being able to manage your risk to counter price volatility will remain essential.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like