Good foreign demand for U.S. soybeans is helping bean markets stay above $10 per bushel, with the January 2015 contract closing up about 25¢ at $10.36 Friday. March ended the week at $10.42, up 24¢. And anticipation of possible reduction in soybean ending stocks could add further support to bean prices, says Bryce Knorr, senior editor at Farm Futures.
He and other market analysts say such rallies could present sell opportunities for growers. Prices had struggled to top $10 before export USDA export numbers added support. USDA indicated that 43.4 million bushels of soybeans were exported during the week. Overall, soybean exports were up 2.75% for week.
Knorr points out that next week USDA releases its month crop report and Farm Futures, a sister publication of Corn+Soybean Digest, expects a minor reduction in 2014-2015 ending stocks to 425 million bushels from November's 450 million.
“The exports helped counter recent bearish news, such as good crop weather in Argentina and Brazil,” Knorr says. “Weather remains favorable for Argentine and Brazil corn and soybeans. Farm Futures expects slight reductions in the corn crops in both countries in next week's USDA report, but no changes in the soybeans.”
Bret Crotts of Schwieterman Trading, Garden City, Kan., says stronger soybean futures “will have traders looking for a move up to trend line resistance near the $10.30 area in the January contract. The head and shoulders top formation is still in play for the moment, but the market isn’t breaking quite as fast as the bears would like.”
University of Illinois Extension Economist Gary Schnitkey projects a typical soybean price at $9.75 for 2015. For a high-production central Illinois farm, that equates to net return of about $225 per acre, based on an average yield of 59 bushels per acre. That compares to net return of about $171 per acre from an average corn yield of 199 bushels an average price of $3.70, he says.
With those projected returns, it may be difficult to justify cash rent levels seen in 2014. So being able to take advantage of soybean and corn price rallies should be considered to boost potential returns. Those rallies may be harder to come by as 2015 approaches.
“We still have very large ending stocks projections and ideas if expanded soybean acreage,” Crotts says. “So for the time being, we should still look to sell rallies.”