Sonja Begemann
January 14, 2021
Markets soared this week after just a half-bushel drop in national soybean yield. Why is that? What does the future hold for the legume?
“The reduction of yield by half of a bushel reduces production by 35 million bushels,” says Mac Marshall, with the United Soybean Board. “But really the upshot is from U.S. soybean stocks got even tighter.
“We look at the Dec. 1 stocks at about 2.9 billion bu., taking into account the crop that was harvested at 4.135 billion, laying on top of it inventories that were placed at the start of September – about 500 million bu. and it nets to imply a quarterly disappearance of about 1.7 billion bu. from September through November. It’s a record high.”
Tight U.S. stocks, paired with drought conditions in Argentina and Brazil mean world supply is questionable, so prices could stay favorable for the bean for a while. Trade partners China, Egypt and Vietnam continue to drive demand. In addition, domestic demand is being driven by increased soybean crush capability and demand.
2021 implications
Looking ahead to the 2021 planting season, Marshall says price levels send a strong signal for increased soybean plantings.
“Farmers across the country are going to have to decide if they want to plant some of the more marginal acres or go off of a strict rotation into soybeans,” he says. “The market is just calling for more and more beans.”
It’s important to keep an eye on South America over the next couple months and prior to planting, he adds. While Argentine farmers have missed needed rains, Brazil has received more timely rains, putting their crops more on-track for normal. A move either direction by these countries could change commodity prices and the favorability of corn versus soybeans.
“Not to overstate the obvious, but weather does matter,” Marshall says.
agweb.com
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