Your Dad always told you there is a “tractor seat bounce” in the market about the time you are on the planter. New crop soybeans have recovered almost $3 from the lows made the end of March. But will delayed corn planting throw more acreage to soybeans and push that market back down? Is this a time to adjust your soybean marketing plan? What about catching up with some sales before the market softens? So many questions, but the farm gate has the answers.

Thanks to many Extension Marketing Specialists who analyze the market from their Cornbelt offices, let’s recap what we know.

• USDA anticipates an 11.2 million acre increase in soybeans to 74.8 million acres this year, and with a trendline yield of 42.1 bushels per acre, production would reach 3.1 billion bushels.
• The average range for soybean prices for the new crop year is forecast at $10.50 to $12.00. Central Illinois cash bids are $12.50 and up, well above the projected range already.
• The new crop soybean market began moving higher two weeks ago and has continued upward, bolstered in part by USDA’s latest forecast for a 185 million bushel carryout at the end of the 2008/09 marketing year.
• Current soybean values have recovered about two-thirds of what had been lost after the February highs.
• There is still uncertainty for both yield and acreage for new crop soybeans.

With those issues in mind, would it be wise to price a portion of your new crop soybeans?

Purdue’s Chris Hurt says with only 185 million bushel carryout, we will not be swimming in soybeans; and he has concerns that as many as two million acres of beans expected by USDA will not be planted, as a result of the late wheat harvest. Hurt thinks there will be some soybean rationing and the mi-point of the marketing range will be closer to $12. Hurt believes November futures may reach $13.50 and provide a good opportunity for cash contracted beans to sell in the mid-$12 range, with 30% to 40% of that priced by the end of May. He’s advocating a diversified pricing strategy that spreads sales across time.

At Illinois, Darrel Good focuses on the uncertainty in the soybean market. He’s concerned that delayed soybean planting will reduce yield prospects, and USDA is using a 42.1 bushel national yield to reach its 3.1 billion bushel forecast, when that is a large jump upward from last year’s average yield. He is also concerned that the crush and exports are also expected to be at high levels, and the USDA meal projections do not correlate with other USDA forecasts for feed use. While there are many question marks, Good says the low level of carryout will mean a continuation of high prices.

South Dakota’s Alan May notes that even with the large increase in acres, new crop supplies of beans will still be tight. He says the market is intently watching the Argentine drama between the government and farmers who are at odds over taxes imposed on exported soybeans, and he says the market is more comfortable with the idea there is less risk in having unplanted corn acres shifted to soybeans. May says the recent bounce in the bean market is “significant,” and “the current value of new crop beans would seem to be all the reason you need to make some sales now.” He says that will protect against any hard downtown that might be in the future.

At the University of Missouri, Melvin Brees says new crop soybean use is forecast at 3.073 billion bushels, just shy of the forecast production of 3.105 billion bushels, which he anticipates should support new crop soybean prices. Brees acknowledges the potential for numerous supply and demand issues for the soybean crop, but says farmers should seriously consider adding to sales. He says futures prices are more than a dollar off their highs, but have recovered two of the three dollars lost since that time, and prices remain at historically high levels. While higher prices can occur, significant downside risk exists, particularly if delays in corn planting push acreage into beans. He adds that the seasonal trend is down, and harvest prices are typically less than what is offered in May.

Summary:
Soybeans will be in tight supply for the balance of this year, but with strong demand, tight supplies and strong prices will be the trend for the new crop. With USDA’s projection for an average cash price of $10.50 to $12.00, current prices are already in the higher portion of that range or above throughout the Cornbelt. Spring prices are typically higher than harvest prices, and several Extension Marketing Specialists are advocating that farmers add to their new crop sales to protect against the downside risk in the market.