Soybean market...poised for a $1 move?

[rsbs]

does anyone else get the feeling that soybeans are going to move a buck pretty quickly?

I have that hunch, but the problem is that I don't really know if the move is going to be up, or down.

a buck up takes us close to $9.50 cash here, what the market was offering back in January pre Covid. You can make a case that soybeans are a good value based on all the dollars printed and the apparent coming inflation. People and livestock still eating and consuming, they are not printing much land etc. Won't the world wide human population still increase for 2020 despite the Covid-19 deaths?

a buck down takes us to $7.50 cash or so, a 2.5 ratio to the current cash corn, which is a pretty normal ratio.....2.1 to 2.9 seems to be the extremes.  And funds think corn is too high, so maybe $7.50 will seem to be a good price in the rear view mirror at harvest.

[BA Deere]

Usually when prices are this low, I figure the next $1 move will be in the upward direction.  But in this day and age, I wouldn`t be surprised to see beans at $6 or beans in the teens in the next 1 year   🙂

I think, that eventually there will be food price inflation, the key is to get there from where we are now.

[roarintiger1]

And........when that food price inflation takes place, ethanol will get blamed.

[rickgthf]

What good is food price inflation when the price of inputs just goes up as well?  And even if the price of food goes up in the store that doesn't mean the producer will gain from it.  Just look at beef prices vs. fed cattle prices.

[BA Deere]

Well, if you want "$13 beans, $200 rent, $40 seed, $200 potash" that isn`t all going to simultaneously  happen with the current "cheap food policy".  Because Mr Bigshot that`s used to working with $5/acre margins in his 30,000 acre operation will quickly double bids for cash rents, pour on 20 yrs worth of $200 fertilizer and the input shelves will be as empty as the Walmart toilet paper aisle last March.  

The glory days of 2009-2014 were a aberration and I fell for it as much as everyone else.  Food inflation is a catalyst that would finally force processors to bid up and some countries to start a reserve.  But like `09-`14 won`t last forever and might not go as high or stay as long as it should to give us anywhere near parity, but any ol` port in a storm.

[elcheapo]

You mentioned the problem...

$200 fertilizer....$40 seed.

We are told in a free market,

Which we are supposed to have,

These input cost SHOULD have

Went down....but we are dumb

And stupid, because we MUST

have these things....no we dont.

[BA Deere]

Remember the old game show "Name That Tune"?  Contestants would vie against each other who could identify a song hearing the fewest notes, sometimes it would get down to only one or two notes and then the audience would say "Name That Tune!".   Well, it`s that way with farming bid $10,000/acre or you won`t get close to buying the farm ( 🙂 bought the farm is another way of saying "he died")  or if you don`t bid $300/acre you won`t rent the farm.  And if you don`t get the land acquired, you won`t have anywhere to plant your $250/bag seedcorn. 

But if you rent a $300/acre  farm, you can`t skimp on cheap seed or cut fertilizer rates or you surely won`t make it.  Seed companies poured money into "R & D", fancy facilities and buy their district reps new Ford pickups every year, so if they cut their seed price they`ll go broke.  

The paperclip is bent back and forth, how many times before it breaks?

[timetippingpt]

Not to rain on this threads, Tale of Tears, but there are ways off of the Merry Go Round. Our expected Cost of Production for corn this year is around $3.20 using average yields (which in Indiana suck btw). Think of a farm like Dave Ramsey thinks of a family. Yep, we get to cut beans with free 9770's, but the cost is low.   🙂

[BA Deere]

Time, thank God for PLC, huh?   🙂   There`s your profit.