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A "sell" signal for soybeans

COLUMBIA, Mo. — The soybean futures market is sending a signal to sell beans now, an economist reported in the quarterly outlook teleconference from the University of Missouri.

"The market is telling us that you can store soybeans for six months and then sell them for 16 cents less per bushel than you can get now," said Brian Willott, grain analyst with MU Food and Agriculture Policy Research Institute (FAPRI).

"The market wants more beans now, instead of later," Willott told farmers listening at meeting sites across the Missouri.

Recent U.S. national-average bean prices have been at $5.40 per bushel. Willott said. The FAPRI estimate for the next year average is $5.10 per bushel if exports remain stable and there are no price surges from disease or weather.

"Soybean exports have been a pleasant surprise," Willott said. "Exports are now projected at 900 million bushels for this marketing year, up from the forecast of 850 bushels in October.

"China is the main buyer. China, however, is an unreliable buyer," he added. "They have been known to suddenly cancel contracts already signed.

"For now China is buying U.S. soybeans, even though they could buy for less from Brazil if they were willing to wait for the Brazilian harvest. That is good for U.S. soybean producers."

Current prices for soybean products are not causing U.S processors to crush more beans, Willott said. With projected lower numbers of cattle and hogs in the coming year, there will be less demand for soybean meal in livestock rations.

Prices are held down by an expected increase in carryover stocks. There was a larger harvest than was anticipated during dry summer months. "Farmers found more soybeans in their combines this fall," Willott said.

Ending soybean stocks are projected at 175 million bushels for this marketing year. That's up from the 155 million projected in August by USDA. Updated crop reports could move the stocks number somewhat, Willott said.

The FAPRI carryover-stocks forecast for next year is 233 million bushels.

The lower price is a signal to plant fewer acres of soybeans this spring, Willott said. FAPRI projects 71.7 million acres to be planted in 2003. That is down from the 73 million acres planted in 2002. Using trend-line yields of 39.9 bushels per acre, FAPRI projects a crop of 2.99 billion bushels for 2003. The 2002 crop is projected to be 2.9 billion bushels.

"Based on that outlook, the best advice I see is to move those beans," Willott said. "It makes sense to sell before the harvest in Brazil." The growing seasons are reversed in South America, with beans growing during our winter.

Duane Dailey is an Extension and ag information senior writer for the University of Missouri.

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