The Big Story from the Monday Reports
Darrel Good, Agricultural Economist - University of Illinois
The big story from the September USDA reports is the size of the soybean crop in the United States. Todd Gleason has more on the implications of the fifty plus bushel to the acre yield.
3:08 radio self contained
The soybean crop in the United States is big. Record breaking, in fact, on two fronts. The 50.6 bushel to the acre national average yield is the largest ever, and it will consequently produce a record breaking four-billion-two-hundred-and-one million bushels of beans. This staggering number makes USDA’s August guess at the size of the crop look meager. It was 1.7 bushels to the acre less and when the September number was released the trade collectively gasped and turned in hopes to the consumption part of the USDA Supply and Demand table. They were most definitely surprised says University of Illinois Agricultural Economist Darrel Good.
Good :35 …last year, even with a larger crop.
Quote Summary - I think the market was really looking for perhaps an unchanged to smaller forecast. And were caught leaning the wrong direction. At this point we are looking at a crop over 4 billion bushels. The good news is the projection of consumption remains pretty high. So, USDA is not expecting a huge build up of inventories this year and think that we could still average around $9 a bushel for the marketing year. This is pretty close to what we did last year, even with a larger crop.
The market is trying to digest all of this bearish news, while at the same moment turning its attention southward. Brazilian and Argentinian farmers are just beginning to sow their summer crops. Which brings us to marketing the big soybean crop in the United States. Floods in Argentina earlier this year decimated its soybean crop. U.S. farmers benefited as importers turned to them to provide their soybean needs. Back in June it was thought the United States would have 370 million bushels leftover from last year’s crop when September arrived. The rains, the harvest time floods in South America, changed every thing and importers gobbled up U.S. soybeans leaving just 195 million bushels available. It tells Darrel Good now is a better time to sell soybeans rather than later.
Good :39 …majority of the soybeans right out of the field.
Quote Summary - You know I think so. Particularly on soybeans if you can get an early harvest. We are seeing some decent basis levels on soybeans right now. We are coming off a period in central Illinois when spot soybean prices were running well above November futures. Twenty to thirty cents above, but it has begun to erode. However, we are still looking at prices pretty close to option value. It says to me with big yields and that kind of price, well over $9.00, revenue looks pretty good by selling some soybeans at least, if not a majority of the soybeans right out of the field.
The sooner the better and the higher the quick ship premium, although those are likely to disappear quickly.