November 28, 2020

Spring bean price jump may be likely

MaxYield Cooperative grain analyst Karl Setzer offers his thoughts in this article that first appeared at www.IowaFarmerToday.com.

By Tim Hoskins, Iowa Farmer Today
With current demand usage, one grain marketer says it is possible soybean prices may jump next spring to $20-25 per bushel.

Despite the sell off in soybeans earlier this week, the long-term fundamentals for beans look strong, especially into next spring, notes Karl Setzer, MaxYield Cooperative grain solutions team leader in West Bend.

He says the selloff earlier this week was started when China announced it would release 3½ million to 4 million metric tons of beans from its reserve.

“That signaled the market that China thinks it has enough beans.”

Then weather reports showed more rain across South America as farmers there start planting beans. Those two factors triggered sell stops in the bean market.

Setzer notes the wheat market also dropped as Australia got rain to replenish its soil-moisture levels. He says September is typically a tough month for commodities futures markets as harvest hedges and basis pressure hit the market.

Corn harvest pressure is hitting the market hard as earlier harvest has added pressure, Setzer says. He thinks corn will trade between $7-$8/bu. for awhile because there is less room for the market to fall but there is less support.

As farmers switch to soybeans, he expects the harvest hedge and basis pressure to switch from corn to beans. However, he thinks the price pressure on beans will be short-lived.

“If we didn’t ration beans at $18 per bu., I don’t think they will get rationed at $15-17/ bu.”

Setzer compared this year to 1973. He says bean prices could be higher especially given at current use rates, the United States could run out of exportable soybeans by the end of the March.

He says a U.S. trade embargo and early South American soybeans entering the global market are two factors that could prevent higher bean prices in the spring.

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