Soybean prices may not plummet as low as some analysts predicted since strong demand continues to chew through record production, according to Iowa Soybean Association (ISA) leaders.
Prior to harvest, grain marketing experts projected soybean prices could slip to $8.50 per bushel or lower after several years of consistent double-digit values. Today’s U.S. Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates Report pegged the nation’s soybean crop at nearly 3.96 billion bushels, 31 million bushels higher than the October forecast. The increase, though, was almost entirely offset by higher soybean export and crush projections.
Grant Kimberley, ISA market development director, said robust demand is keeping prices from bottoming out. Domestic and international crush margins are profitable and livestock producers worldwide are in expansion mode.
“Strong demand has helped utilize this record national crop. It may prevent the market from testing the projected low levels,” said Kimberley, who also farms with his family in central Iowa.
China continues to be a strong buyer of whole beans from the United States. But Kimberley said the real story is Mexico and the Philippines, which have stepped up soybean meal purchases.
U.S. soybean exports for 2014/15 are estimated at 1.72 billion bushels, up 20 million bushels from last month, according the report. The soybean crush is forecast at 1.78 billion bushels, up 10 million due to increased meal exports.
Soybean ending stocks remain unchanged from last month at an estimated 450 million bushels, the report said. The U.S. season-average projected price also stayed steady at $9 to $11 per bushel.
With harvest nearly finished, Kimberley doesn’t expect production numbers to change much in the coming months.
“The trade has a pretty good handle on production,” he said. “At these price levels, there is good demand and confidence of buyers will increase.”
Iowa is responsible for one-third of the national production increase, according to today’s USDA Crop Production Report. The state’s soybean harvest is forecast at nearly 514.3 million bushels, up more than 10 million bushels from last month.
The government increased Iowa’s average soybean yield by 1 bushel to 52 bushels per acre. Yield gains in Iowa and South Dakota helped bump up the national average to a projected record 47.5 bushels per acre.
“We are in a global market and it is important that soybean producers look at what is going on in the world and try to resist reacting to what is going on in our backyard,” said ISA President Tom Oswald of Cleghorn. “There are a lot of factors that can have an affect farmers’ back pockets.”