There are lot of soybeans in the world. Last fall U.S. farmers harvested a record crop, and their counterparts in South America are doing the same right now.
The South American soybean crop should be about 400 million bushels bigger than it was last year, some six billion bushels in total. More than a third of it should still be around, about 2.2 billion bushels, when U.S. farmers go to the field this fall. Add that number to what USDA expects will be left from the U.S. crop and you get about 2.6 billion bushels... before the combines roll in the United States. It is a big number and can't be good for price, but maybe it's not as bad as many think either says University of Illinois Ag Economist Darrel Good.
Soybean prices have remained relatively high in the face of such large U.S. and world soybean supplies, with the un-weighted average price received by U.S. producers during the first five months of the 2014-15 marketing year likely near $10.25 per bushel. However, prices have declined by $0.50 to $0.60 per bushel over the past month. Going forward the price of soybeans will be determined largely by the expected size of the 2015 U.S. soybean crop. The first milepost will be the number of acres planted. USDA will release an estimate March 31st. This past year U.S. farmers planted almost seven million more acres of soybeans than they did in 2013.Given the large increase in soybean acreage over the past three years, a more modest increase might be expected this year if crop prices remain near current levels.
Planted acreage near 85.5 million seems a reasonable expectation thinks Darrel Good.
Since the beginning of the "freedom to farm" era in 1996 says Darrel Good, planting intentions reported in March have provided an unbiased forecast of actual plantings. Over the 19 year period actual acreage exceeded intentions in 10 years and was less than intentions in nine years. On average, actual plantings exceeded intentions by just 98 thousand acres. However, the difference (some negative and some positive) exceeded a million acres in nine years, two million acres in 4 years, and three million acres once.
The June USDA Acreage report will provide a clearer picture of soybean acreage. Good says if U.S. farmers plant 85 and half million acres of soybeans, and if the harvested acres yield 45 bushels to the acre, then the United States would harvest 3.8 billion bushels of soybeans. That would be162 million bushels smaller than the 2014 crop, but probably lead to an over all supply of about 4.2 billion bushels or 120 million bushels more than this marketing year.
Compared with the current marketing year, expectations for the 2015-16 soybean marketing year include increased acreage, a further increase in year-ending stocks, and lower prices. The expected price decline is moderated by the likelihood that stocks at the end of the current marketing year will be about 90 million bushels less than projected last fall. That is equivalent to two million acres. Given all this, Darrel Good says prices are not expected to be as low as the CBO baseline projection of $8.19 or even the USDA baseline projection of $8.50. The futures market currently points to a marketing year average near $9.50 per bushel for new crop soybeans.