There aren't a ton of soybeans out there, either in the pipeline or in the ground, and that should fuel some upward momentum for the bean trade, says Purdue economist Chris Hurt. As a result of this supply situation -- brought on by both poor growing conditions in South America and the demand push for more corn in the U.S. -- there's opportunity in soybeans right now.
"The first change is the size of the South American crops, where expected corn production increased and expected soybean production decreased sharply. Primarily as a result of changes in South America, anticipated world corn production has grown by 250 million bushels and anticipated world soybean production has dropped by about 575 million bushels since the USDA's intentions survey was completed," Hurt says. "Grain markets have been asking for more soybean acres, and that request turned into a plea with the latest USDA updates. Markets are now in their last-gasp effort to convince farmers to plant more acres of soybeans and fewer corn and spring wheat acres."
The supply side's not the only one to worry about right now, either, Hurt adds. Right now, China's buying enough soybeans on the export market to lend strength to the bean markets. Altogether, that's helping push the price advantage for U.S. farmers planting soybeans up to $78/acre higher than corn right now.
"Knowing that farmers follow economic incentives and that the economic incentives for soybeans have sharply increased since the USDA last surveyed farmers, it is certainly possible to see that magnitude of acreage shifts when USDA releases their next acreage update on June 29," Hurt says.
Any soybean acres more than those projected earlier this year will likely come in parts of Iowa, Wisconsin and the Dakotas, areas where fewer acres have been planted, Hurt says. Still more acres could come from double-cropping with wheat.
""In some form, the market would like to see 2-3 million acres shifted out of corn and spring wheat into soybeans," he says.
