With new-crop soybean futures at about $12.70/bu. and higher than any trading months through November 2014, there are limited market incentives for farmers to “hold and store” soybeans for later sale, says Dan O’Brien, Kansas State University Extension grain economist. But with supply and demand issues coming from all directions worldwide, that doesn’t mean there won’t be opportunities to ride markets up next year.
“Worldwide production and usage of soybeans and other oilseeds impact soybean prices at your local elevator,” he says. “So my inclination is to think that during the next 12 months, where pre-harvest production uncertainty exists in either South America (November-May) and the U.S. (May-September), soybean prices may be higher than the current normal crop prospects set of futures prices seen today.”
It’s a world market no doubt. That is illustrated in reports by our sister publication, Farm Futures, which points out that Brazil’s Mato Grosso region is seeing rains again this week, boosting soil moisture in the key production region. Showers are also seen in southern Argentina this week. Reports are that about 7% of Brazil’s crop has been planted, so rains should help.
“We should keep an eye on what’s happening in South America,” O’Brien says. “As soybeans eventually become available from South America, it impacts our prices. So do other oilseed and grain activities overseas.”
Farm Futures notes holidays elsewhere can impact U.S. soybeans. For example, quiet oilseed markets were seen early this week due to holidays in Muslim countries that use the Malaysian palm oil market.
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November canola in Winnipeg, Canada, gained 2.8¢ to $10.5 early Tuesday after a holiday Monday (not Columbus Day, but Canadian Thanksgiving). Then there were January soybean futures in China off 1.8¢ to $20.7.And November rapeseed in European morning trade Tuesday was flat at $11.4.
O’Brien and others monitor all of these markets, and then some. “We watch those other exchanges,” he says. “Middle Eastern exchanges (for buyers of U.S. soybeans) are on the other side of the transaction for us. What happens in the Black Sea can have a big impact on our wheat prices. China’s many markets can all impact U.S. crop prices.”
So remember, what happens in Malaysia impacts bean prices in Des Moines, Iowa or Moline, Ill. You can’t judge your overall bean marketing simply only on local bids from the elevator or hog facilities.
“Being aware of soybean supply-demand trendsin other parts of the world may help you make profitablemarketing decisions,” O’Brien says.