November 24, 2020

New crop soybeans, demand get attention

This article first appeared at www.IowaFarmerToday.com.

 

Traders’ attention has turned to the new-crop soybean supply as well as corn and soybean demand.

That means beans are the market leader at the moment as traders think about what the new-crop supply will be when harvested this fall, notes Karl Setzer, grain solutions team leader for MaxYield Cooperative in West Bend.

He says current carryout is forecasted at 130 million bushels. If soybean yields drop 1.5 bu./acre from the national average yield, it would wipe out the new-crop bean carryout. That is one reason why traders are trading higher old-crop beans until they know the new crop bean production, Setzer adds.

He says the current crop tours should not produce any market-surprising news as trade has figured low corn supplies into the market, and soybean yield estimates are tough to be accurate.

However, Setzer says corn demand is starting to drop. He says export basis is negative enough barges filled with corn harvested in the South are being pushed north on the Mississippi River.

“That is practically unheard of.”

Since May, when the USDA came out with the first supply and demand report for new-crop corn and beans, Setzer says corn demand has dropped by the same amount as new-crop corn production. He says there is an interaction between the corn and bean demand markets since ethanol production has slowed, so has the DDGs production.

Therefore, that has increased demand for soybean meal.

Setzer says it is possible the United States might run out of beans for domestic use by March. However, the trade is more concerned about short-term needs than long term.

He says it looks like South America will need to cover world soybean supplies early next year, and they are looking to increase production from this past year.

Setzer says there is some early talk about the need to purchase acres for the 2013 growing season.

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