Remember the day when producers thought $7.50 soybean prices were high? That was only two years ago. It is only human nature that whenever we look at a price, even if it is only subconsciously, we are comparing that price to either the most recent highs or the most recent lows to form an opinion as to whether the price is high or low.

A year ago, on the way up in the bull market, producers assumed that prices were high and were aggressive sellers starting at $8 because they were comparing to the 2006 prices at approximately $6.

Now, the comparison is to last year's high at $15 or higher. Forget the fact that a pickup truck will probably hold the majority of beans sold at $15 or higher, but that is now the mental benchmark.

The bottom line: New-crop soybeans at $9 per bushel are high relative to historical price relationships. Now the question — are the fundamentals there to push this market even lower?

THE BULLISH SIDE

Everyone is well aware of the drought that has hit Argentina and Brazil. USDA is now estimating Brazilian production this year at 57 million metric tons versus last year at 61 million metric tons. Argentina's production is pegged at 43.8 million metric tons versus last year's 46.2 million metric tons.

Soybean exports are running approximately 10 percent higher than they were a year ago. That is the bullish news that has kept the market at this price level. It is well known by everyone and thus discounted in the market.

So what will be the driving force in the months ahead? It is also no secret that planted acreage in soybeans in the United States this coming spring will likely skyrocket. The cost differential between planting soybeans versus corn or cotton is significant. $9+ soybeans off the combine are also attractive — if you sell them there.

This past year, U.S. farmers planted 75.7 million acres of soybeans. Current estimates of this spring's acreage range from 78 million to 80 million acres.

At 78 million acres, my estimate is carryover supplies will jump from this year's estimated 210 million bushels to over 500 million bushels. If 80 million acres are actually planted, carryover could exceed 650 million bushels. If the latter occurs, by harvest cash soybean prices will start with a six.

UNCERTAIN TIMES

No doubt these are uncertain times and anything can happen. There could be a price war on old-crop soybeans because of the tight carryover, which will help support the new-crop. But old-crop fundamentals and new-crop fundamentals are two different worlds right now.

If you are planning on increasing your soybean acres this year, lock in the profits before you plant them. This price level is not going to last very long. Too many producers will base this year's strategy on what they did last year.

Those who sold early last year are in the mood of “I learned my lesson last year. I'm not selling early this year.” What they learned is they should not have sold early last year. Soybean prices are in the midst of a long-term bear market. This is not a year to be storing or waiting to make pricing decisions.