Soybeans are enjoying higher prices so far in 2016.
Soybeans are enjoying higher prices so far in 2016.

The May 10, 2016, WASDE reports from USDA rocketed up soybean futures $0.50 per bu., but the upward trend has been happening for the past two months. In early march, July ’16 futures were trading below $9 – now, they’re well above $10.

Chris Hurt, ag economist with Purdue University, notes that prices have risen around 25% since March 1. Compare that to corn, which has seen a much more modest 4% gain over the same time period.

“Given prospects for high-priced soybeans and low-priced corn, the financial incentive to shift corn acres to soybeans has reached new highs,” he says.

Will farmers make an acreage swap? Many still have an opportunity. As of May 8, 2016, the Midwest has 64% of the corn crop planted and 23% soybeans planted.

Purdue ag economists project that soybeans could net $116 more per acre than corn in 2016.

“This is one of the highest incentives to shift from one crop to another we have ever seen,” he says. “Delayed planting this spring may actually turn out to be a financial blessing if farmers end up planting more soybean acres.”

Anecdotally, Paul Georgy with Allendale, Inc., says some of their Minnesota customers are switching some of their spring wheat acres to soybeans.

“A customer said he heard the market report on Tuesday while he was planting wheat,” he says. “He came to the end of the field, emptied the wheat out of the drill and replaced it with soybeans, and planted soybeans on the balance of his acreage.”

Soybean prices have been buoyed by several factors this spring, including weather concerns from South America, high demand from China and U.S. and global stocks falling faster than previously expected.

Could soybean prices climb even higher? Rabobank warns that the May 10 report could have been “overdone” and prices could remain volatile moving forward. In the video below, marketer Kevin McNew with Grain Hedge speculates what would be needed to push soybeans above $11.