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marketeye
Veteran Advisor

2012 Thoughts on $15+ Beans

NOTICE: THIS IS A STORY THAT RAN ABOUT THIS SAME TIME OF THE YEAR IN 2012. 

As I read this story from my archive file, I thought it was interesting that some of the same marketing thoughts could be happening today. The big difference, the corn market was rallying yet.

 

A Look Back:

With the CME Group soybean market trading over $15.00 per bushel, can you hear the tractors planting corn idling down, heading to the shed to switch corn out for soybean seed?

The falling South American crop estimates have put the CME Group July soybean market on a path to reach all-time highs of $16.63 per bushel, some analysts say. 

With the month of May a few days away, U.S. farmers have ample time to answer the call of the market for an additional 2.0 million soybean acres in 2012. 

The USDA will update it's stocks numbers on May 10. But, it's not until June 30th when the governmental agency refreshes their estimate for U.S. planted acres.

"June 30th will be a very important report for the soybean market," one CME Group floor trader, requesting anonymity, says. "I hope we see large acres and good weather, from here on out. Too many things on one side of the boat is not good for anyone, even the farmer. If we kill off the export trade growth with high prices, we will end up paying for it later," the floor trader says.

Acreage Shifts

Farmers in the Marketing Talk section Friday debate the switching of acres from corn to soybeans. "I really see no reason to switch to beans from corn acres myself. I live in Nebraska, but if you can raise 200 bushel dryland corn at $5.00, that's $1000/acre. If you grow 60 bushel beans, at $14.00 that's $840/acre. For me. I'd plant corn," highyields says.

Mizzou_Tiger sees the switch to more soybean acres already happening.

"In this day and age, where the majority of soybeans are mainly delivered in bulk form, there will be plenty in a short amount of time if need be. Not to mention the natural cushion soybean planting allows in some extra time."

Meanwhile, Farmerjoe79, sees likely benefits from a sharply higher soybean market. "I think a guy is going to be surprised when the acreage report comes out in June. Why not plant beans and own corn on the board. Makes for al ot easier fall and beans are more profitable at these price levels," Farmerjoe79 says. 

Cost of Production

The cost of production, not seed availability, will be the deciding factor for the U.S. farmer to switch acreage.   

One of the first things that will be considered before switching acres (if the original intent was planting corn) is did the farmer apply nitrogen to the area in which they are considering to switch from corn to soybeans, Steve Kahler, Teucrium Trading analyst says. 

"If nitrogen has been applied, the price spread would have to make up for the cost of the nitrogen given soybeans do not consume nitrogen," Kahler says.  

Timing is a second major consideration for farmers trying to decide to switch acreage. "If unplanted areas intended to be planted to corn continue to see wet and cool weather conditions, farmers may decide to swing acres towards soybeans if planting date becomes late enough. It doesn't appear to be a major threat in most areas at this time," Kahler says.

How High?

So, how high can this soybean market go? That's the question on the minds of many farmers and marketwatchers.

The easy analysis is to compare today's soybean market scenario to the 2008-2009 growing season. That year, soybeans saw a 22.0 mmt decline in South America's production. Today, we are on the same trajectory, with a similar to even greater loss and a tighter world balance sheet, the CME Group floor trader says.

"In 2008, July soybeans rallied to a contract high of $16.63. The U.S. Dollar is about 7 to 8% higher this year. So, a $16.63 price, in dollar terms, would be around $15.30 by comparison," the floor trader says.

Price predictions are coming in from all directions. 

Giolucas, a Marketing Talk member, took his shot at prognosticating the soybean market. "I am not much of a predictor. But, I think we take out $15.00, and maybe we go to $15.15  in the July soybean contract.  This market has been swinging up and down but it seems that it is just going up. The daily charts look one way, UP," giolucas says. 

 

Marketeye

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5 Replies
Hobbyfarmer
Honored Advisor

Re: 2012 Thoughts on $15+ Beans

two bto guys still pulling on nh 3 in my neighborhood yesterday. One corn on corn.

Getting very dry here. Tile lines didn't run all winter. Ran a little bit few weeks ago but have stopped again. 

Most pastures very sad early growth.

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tree fmr
Advisor

Re: 2012 Thoughts on $15+ Beans

Tile still running here, more like trickling. Will there be more beans planted in the path of the Derecho because easier to control volunteer corn?  We only have one field of corn on corn, field is surrounded by woods, deer and turkey clean up dropped corn to the point you cannot find a kernel by April!

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Wind
Advisor

Re: 2012 Thoughts on $15+ Beans

I doubt there will be a switch from corn to beans around here.  Not seeing it anyway.  Most here planted their beans first and then spent hours switching the planter from beans to corn.  I did get my corn- planted in moist dirt, 2.5" deep at 34,000 pop.  I will wait to plant beans after a good rain.  Too dry.  Had a total of .82" in April, less than 25% of normal.   Agree with Hobby, "Getting very dry here."  We don't have the capability to dial in a 1" rain when needed.

 

Still could grow a very good crop if the rains would start coming at a normal rate.

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BA Deere
Honored Advisor

Re: 2012 Thoughts on $15+ Beans

I don`t see one acre shifted around here because everyone`s done (I say tongue-in-cheek).   Donny W at Garner has been done with everything a week ago.  It`s dry here, forecast is rain Sunday night, but Accuweather has it at about 30% and 20-35% might be 1/10th" here and there but with those percentages probably no 1" soakers.   Saw a funny Tweet "Now corn is $7 again,  I can pay off the stuff I bought last time corn was $7"   Smiley Happy 

rickgthf
Senior Advisor

Re: Corn or beans, rain or no rain; place you bets gentlemen.

After raining all day, it snowed here last night.  It's hard to get excited about planting into cold ground.  Went on a parts run this morning, a lot of ground worked, just as much not, nothing planted.  I guess I'm not the only one a little behind.

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