It’s a word soybean farmers haven’t heard much lately, but that’s how Iowa Soybean Association (ISA) leaders and industry analysts described this week’s U.S. Department of Agriculture’s Prospective Plantings and Grain Stocks reports.
Soybean acres are expected to decline slightly across Iowa and the nation and soybean stocks, while significantly larger than last year, are lower than industry expectations. Coupled with relatively strong demand, the reports may help prices that have languished at unprofitable levels for most producers.
Iowa farmers are expected to plant 9.7 million acres of soybeans, down 2 percent compared to last year, according to the plantings report. Nationally, 82.2 million acres of soybeans are projected to be seeded, down less than 1 percent from last year.
ISA Market Development Director Grant Kimberley recently returned from an agriculture-focused trip to China, the world’s No.1 soybean buyer. Even though the economy of the world’s most populous nation is slowing, he said it’s still growing.
“Both reports were positive,” Kimberley said. “Demand is still good — that’s the bottom line. The need for protein and meat continues to increase in China. We visited an egg laying facility under construction, which will be one of the largest in the country. That’s just one example of global soybean and soybean meal demand increasing.”
Kimberley added the U.S. dollar has weakened a bit recently, which could boost demand for soybeans and soy products.
There’s plenty of soybeans available. The Grain Stocks report said an estimated 1.53 billion bushels are in storage nationwide as of March 1, which is 26 million bushels less than trade projections. Iowa has 328.3 million bushels of soybeans on hand as of March 1, compared to nearly 258 million a year ago.
Al Kluis, owner of Kluis Commodities of Wayzata, Minnesota said the reports were fairly rosy for soybeans. He said the lower soybean stocks figure compared to what traders expected was surprising.
“That’s a pretty big drop percentage wise and the acreage isn’t negative either,” Kluis said.
Soybean futures, trading at about $9.09 per bushel prior to the report being released, held mostly steady after.
“(Soon) we will be trading on the weather,” Kluis added.
ISA President Elect Rolland Schnell of Newton will keep an eye on planting progress and crop development. Delays getting soybean seed in the ground and crop stress, coupled with less acres and lower-than-expected stocks, could push prices higher.
“The one thing that can really affect the market now is weather,” Schnell said. “If farmers see an uptick they better be on their toes to take advantage of small rallies because the home run may not come.”