Soybean futures prices seemed on the verge of complete demise just weeks ago as it was assumed that the very slow planting pace of corn might lead to additional acres of soybeans being planted in the United States this spring.
The soybean story, bearish due to hearty yields last year along with lost demand due to the trade war with China, seemed like a spiraling death circle for prices, with some analysts citing $6 a bushel by harvest. Mother Nature, however, may have other ideas in mind as the recent relentless rain has brought even soybean planting in the eastern section of the country to a halt. As of the June 17 planting progress report, there were still 19 million acres of soybeans that needed to yet be planted with prevent plant dates staring farmers in the face.
In the June 11 U.S. Department of Agriculture report, soybean planted acres were still pegged at 84.6 million acres (overall down from 89 million acres last year). Due to the rain, now the idea of achieving 84.6 million planted acres actually seems farfetched as the persistent rains keep hammering down on already saturated soils. With July 1 approaching, and a summer forecast of continued cool and wet expected, how many additional acres can realistically get planted, and what will that do to ending stocks/carryout?
Using current June 11, 2019 USDA supply/demand data, if planted acres end up dropping to 82 million acres (down from 84.6), and there is no change to (expected trendline) yield of 49.5 bushels per acre, then ending stocks come in at 900 million bushels, down from the current number of 1.045 billion bushels.
But let’s take it one step further. Assume the possibility of a larger than expected planted acreage drop, taking off 5 million planted acres, which would then peg planted acres at 79.6 million acres. With as late as this crop is getting planted, achieving trendline yield also seems less likely. So let’s also shave 3 bushels an acre off production, and suggest nationwide soybean yield comes in at 46.5 bushels per acre. Using this combination, ending stocks for 2019-20 would come in at approximately 550 million bushels, down half from just the year prior!
In one year, due to weather, dramatically reduced soybean production could potentially turn the bearish soybean situation into bullish. Stay tuned. Summer is not over, and neither is this soybean story.
Editor’s note: Naomi Blohm is a marketing advisor with the Stewart-Peterson Inc. and she is a regular contributor to the Iowa Public Television series “Market to Market.” She can be reached at firstname.lastname@example.org.