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Soybean
Bull Market Snorts And Paws, But Will It Charge?
Soybeans are already in a bull market, but several
USDA reports are due out tomorrow that may trigger a stampede, says
Chris Hurt, Purdue University Extension economist.
"What we've seen so far has been a steady, sustained march upward in
soybean prices since mid-August," says Hurt. "The bull is snorting and
pawing. Something in tomorrow's reports may signal a charge, and if
soybean prices do take off, they could really take off."
On Friday, the USDA releases World Agricultural Supply and Demand
Estimates, a U.S. Crop Production Report, a World Agricultural
Production Report, World Markets And Trade reports for grains and
oilseeds and the latest U.S. agricultural trade data. There are several
potential triggering points for a soybean bull market charge, says Hurt.
One potentially big trigger could be stronger-than-expected soybean
export numbers.
"One of the tipping points could be if export demands continue as strong
as they are now," says Hurt. "There hasn't yet been a buying frenzy from
the foreign sector for soybeans like there was recently for wheat. The
world buyers are still hopeful that the South American crop will have
record acreage and a record production year."
Yet, current estimates are that the soybean acreage in South America is
only up 5-6%, says Hurt. In addition, China currently has a desire to
import more soybeans to keep food inflation down.
"With the U.S. dollar falling like a rock and rapid economic growth and
food inflation in China, the indicators point to much more aggressive
buying by China, the largest importer of U.S. soybeans," says Hurt. "So,
the potential for $12 cash soybeans is certainly not a stretch. After
wheat, certainly soybeans could be the golden crop that is in shortest
supply in the world, but it all hinges on South America."
So far, there is no indication for a huge increase in acreage in South
America, confirms Matt Roberts, Ohio State University Extension
economist. "There might be a 3-5% increase in acreage, but it won't go
much larger because the weakening dollar offsets the potential gains
from growing soybeans in other countries. There's just not a strong
enough incentive right now to grow more."
However, the potential downside risk to soybean prices is also
quite real, says Hurt. If South America produces a record soybean crop
and U.S. soybean acreage and yield increase significantly in 2008, cash
soybean prices could fall to $8/bu. by next summer, he points out.
"There's a $4/bu. range in cash prices for soybeans that are possible
this marketing year," says Hurt. "That represents a $200/acre potential
difference in revenue to farmers."
As a result, Hurt advises farmers to put together a marketing strategy
that stretches out pricing across the marketing year with tools that
protect against downside risk. Typically, the best marketing
opportunities will occur before the end of November and then again
sometime between mid-March and mid-May, says Hurt. He also advises to
keep a small amount of soybeans on hand into next summer in case U.S.
weather problems occur that would cause prices to spike.
Pricing and delivery dates may occur at different times, reminds Hurt.
"Even for pricing done this fall and winter, the best delivery period is
expected to be next summer," he says.
"There are fairly strong futures prices for July delivery right now,"
says Hurt. "Hedge-to-arrive contracts at your local grain elevator would
also be a good alternative for marketing soybeans. A third possibility
would be to forward contract soybeans for June or July delivery, and
another potentially good alternative would be to buy put options to
protect your downside risk, which also leaves all the upside price
potential in place."
Even an average price for soybeans this marketing year will likely be
near the best price most U.S. soybean farmers have ever enjoyed, says
Hurt. "It may cost you 90¢ to protect your downside risk with a put
option right now, but in the current market you also have a lot to
protect," he concludes.
To view USDA's supply-demand and crop production reports on Friday,
click here: www.usda.gov/wps.
To read more of Hurt's comments on soybean markets, click here: www.agecon.purdue.edu/extension/prices.
By John Pocock
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Soybean Harvest 92% Complete, Corn 86%
Complete
Soybean harvest for the nation's top-18
soybean-producing states is 92% complete, "two points ahead of last year
and the five-year average," according to USDA's National Agricultural
Summary for the week ending Nov. 4. "Most of the Corn Belt's [soybean]
producers had nearly completed harvest, while producers in the central
Great Plains advanced more than 11 points during the week."
The USDA estimates soybean harvest is 98% complete in Illinois, 96%
complete in Iowa, 97% complete in Minnesota, 96% complete in Indiana and
98% complete in Missouri. Soybean harvest in Nebraska, however, is
lagging by two points compared to normal, at 94%.
Corn harvest is also nearing completion, with the USDA estimating
the crop to be 86% complete among the top-18 corn-producing states, six
points above the five-year average. "Warm, dry conditions aided progress
as harvest in Iowa and the Dakota's advanced 20 or more points during
the week," according to the report. "Minnesota, Missouri and the Dakotas
were lagging behind last year's pace, while all other states were at or
ahead."
To read the full USDA National Agricultural Summary for the week ending
Nov. 4, click here: usda.mannlib.cornell.edu/usda.
By John Pocock
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Decline In
Soybean Stocks Drives Prices Higher
Prospects for a sharp decline in U.S. soybean stocks
by the end of the 2007-2008 marketing year suggest that an increase in
U.S. soybean production, and therefore acreage, will be required in
2008, says Darrel Good, a University of Illinois Extension marketing
specialist. "That perceived need has provided underlying support to
soybean prices," says Good. "Some analysts have already projected a
large increase in U.S. soybean acreage in 2008. However, forecasts of
the acreage response in the U.S. before the outcome of the 2008 South
American crop is clearer cannot be very accurate.
"While some production decisions have already been made, producers
clearly demonstrated the ability for late-season acreage flexibility in
2007 when planted acreage of soybeans was nearly 3.5 million less than
intentions reported in March. There does appear to be a bit of a
knee-jerk reaction by producers to plan for more soybean acreage in 2008
with November 2008 futures above $9.50. However, December corn futures
at $4.25 suggest that corn is still potentially more profitable than
soybeans in much of the Midwest."
Good's comments came as he reviewed soybean prices, which moved to the
highest level for the current marketing year on the last day of October.
November 2007 futures traded to $10.185. November futures have reached a
high over $10 only once before, when the 1988 contract traded to a high
of $10.46.
The average spot cash price of soybeans in central Illinois
reached a high of $9.73 on Oct. 31, well below the recent high of $10.40
established on March 22, 2004. Basis levels continue to strengthen,
although basis remains generally weak by historic standards.
"The Illinois River basis strengthened by 43¢ from Oct. 15 through
Nov. 2, while the average central-Illinois basis strengthened by only
20¢," says Good. "The average cash price in central Illinois on
Nov. 2 was 35 ¾¢ under November futures, compared to the
average for the previous four years of 19¢.
"Future basis strengthening is likely as the marketing year progresses,"
says Good. To read more of his comments about the soybean market, click
here:
cornandsoybeandigest.com/soybeans/soybean-prices/.
Source: University of Illinois
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ASA Calls On Congress to Override President's
WRDA Veto
The American Soybean Association (ASA) is urging
Congress to override the veto of the Water Resources Development Act
(WRDA) made Friday by President George W. Bush. ASA has worked for years
to secure passage of WRDA legislation because it provides much-needed
improvements to waterways that are vital to the transport of U.S.
soybeans.
In September, the Senate overwhelmingly approved the WRDA conference
report in an 81-12 vote. Likewise, the House of Representatives approved
the WRDA legislation in August in a vote of 281-40.
"Soybean growers appreciate the bipartisan efforts of Congress to pass
this legislation and urge members to take the final step needed so
America's waterways will receive long-overdue improvements," says ASA
President John Hoffman, a soybean grower from Waterloo, IA. "More than
75% of U.S. soybean exports move to world ports through the Upper
Mississippi and Illinois River systems so WRDA is key to soybean
growers."
ASA is inviting all U.S. farmers to utilize its online Legislative
Action Center, available at www.SoyGrowers.com, to immediately
send emails to Congress urging an override of the president's veto.
U.S. waterways are the most economical and environmentally friendly way
to move U.S. soybeans to domestic and foreign markets. WRDA legislation
will authorize funding for construction of seven new locks and other
critical improvements on the Upper Mississippi and Illinois rivers. More
than 50% of U.S. locks and dams have aged beyond their life cycle and
many are crumbling. In addition, many are unable to handle today's
barges that are twice as long as when the system was built in the
1930s.
Source: The American Soybean
Association
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Corn Growers
Also Call On Members To Campaign Against Bush WRDA
Veto
President Bush on Friday vetoed the Water Resources
Development Act, which included long-sought funding for the building of
new locks on the upper Mississippi River and the Illinois River to speed
up freight traffic.
Bush had long threatened to veto the popular $23 billion bill, which
also contained projects for coastal restoration in Louisiana following
Hurricane Katrina and improving the Florida Everglades, saying it was
too expensive.
The National Corn Growers Association wasted no time in calling on
Congress to override the president's veto. "Members of the National Corn
Growers Association do not plan to take the president's veto lightly,"
notes NCGA President Ron Litterer in a press release on the group's Web
site. "We are rallying our 32,000 members and will wage an all-out
grassroots campaign to override the veto."
To read this article in its entirety, click here: cornandsoybeandigest.com/ag-issues/bush-water-resources-bill/.
By Richard Brock
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New Farm Bill On Senate
Floor
The full U.S. Senate begins debate on a new five-year
(2008-2012) farm bill during the week of November 5-9. The U.S. House of
Representatives passed a new farm bill in late July 2007.
The proposed Senate farm bill maintains many of the current safety net
features for crop commodity programs, such as direct payments,
counter-cyclical payments (CCPs) and the CCC marketing loans and loan
deficiency payments (LDPs). The proposed Senate bill also includes
legislation for a permanent disaster program, enhancements in
conservation funding, new initiatives for renewable fuels and more
restrictive farm program payment limits. The proposed Senate farm bill
would also include a choice for producers to switch from the current
price-only CCPs to a new average crop revenue (ACR) program, with
potential CCPs that are revenue-based calculations taking into account
county average crop yields and crop prices.
On the U.S. Senate floor, several amendments to the new farm bill are
likely to be offered, including some that could potentially make
substantial changes in the proposed legislation. Some of these
amendments include a hard cap of $250,000/individual on farm program
payments, more funding for food and nutrition programs, changes in LDP
calculations, elimination of all current commodity programs with
redirected funding and addition of farm worker immigration language.
Debate and votes on all of the likely amendments could slow the passage
of the farm bill in the Senate, and make it difficult for Congress to
complete work on the farm bill in 2007.
Once the Senate passes a new bill, a House and Senate Conference
Committee will work out differences in the House and Senate versions of
the new farm bill before the compromised version of the bill is voted on
for approval by the entire U.S. House and Senate. Once approved by
Congress, the new farm bill needs to be signed by President Bush before
it becomes law. The Bush Administration has been very active in
discussions related to a new farm bill, and has raised some concerns
with certain provisions in the bill -- especially related to budgetary,
payment limit and immigration items. If the new farm bill is vetoed by
President Bush, it must go back to Congress for either a veto override
or passage of a revised bill.
To learn more about the new farm bill and also read about crop harvest
progress and farm safety issues, click here: cornandsoybeandigest.com/ag-issues/harvest-farm-bill-completion/.
By Kent Thiesse
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ADVERTISEMENT
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Webcast on "Risk Management" sponsored by Asgrow soybeans.
This video is part of the "Business Skills Series" featured in issues of
Farm Industry News and online.
Just click on this link and
"play presentation" - for an informative webcast from Moe Russell!
There is a new topic every month.
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2007 Soybean Rust Discoveries Indicate Need
For Vigilance In 2008
As Iowa soybean growers finish harvesting the 2007
crop, Iowa State University (ISU) has been scouting late-planted fields
for signs of Asian soybean rust -- and they've found it in 14 counties
across the state.
"Discovering soybean rust in multiple counties clearly indicates that
the disease reached northern production regions," says X.B. Yang, ISU
plant pathologist. "Data suggest that the spores reached southwestern
Iowa as early as August this year."
The discovery of rust in Iowa this year was no great surprise to some.
Checkoff-funded research conducted at ISU predicted the possibility.
Yang says he has been refining a weather-based computer model to track
the movement of rust spores from known infected locations and predicts
where the disease may develop based on climate conditions.
August rains are the likely culprit that sprinkled rust spores over Iowa
soybean fields. When discovered, the disease was in its very earliest
development stages in most fields with the exception of Fremont County
where disease development had progressed to 20% incidence.
Scouts for soybean rust are individuals from the Iowa Soybean
Rust Team First Detectors, a group of 700 highly qualified crop
professionals trained to identify the disease by ISU through a
partnership with the Iowa Soybean Association (ISA). ISU and the soybean
checkoff began training First Detectors during summer 2004, before rust
was found in the U.S.
"Soybean producers need to continue to be vigilant and manage their
soybean crop to optimize yield and profitability," says David Wright,
director of contract research, ISA. "Producers should increase the
management of their soybean crop through increased scouting efforts."
To date, Asian soybean rust has been confirmed in 2007 in Adair, Dallas,
Des Moines, Fremont, Hancock, Iowa, Johnson, Lee, Muscatine, Polk,
Pottawattamie, Ringgold, Story and Washington counties. Although the
development of rust in Iowa fields happened too late in the growing
season to cause any real damage, it is a significant discovery for
soybean producers.
Online resources for soybean growers include www.sbrusa.net, www.planthealth.info, www.soybeanrust.info and www.iasoybeans.com.
Source: Iowa Soybean Association
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Views From
Agricultural Lenders -- Part I
Let us stop the Road Warrior tour in Mankato, MN,
located south of the Twin Cities. I had the opportunity to speak at the
FINPACK Conference for lenders. What was unique was the ability with
technology to get the pulse of 80-plus attendees on various subjects of
agriculture. Bob Craven, the director, and his team were certainly able
to add significant amounts of interest and energy with this new angle,
with the push of a clicker. Participants pushed clickers to instantly
answer questions regarding key agriculture issues.
Participants were asked what their outlook was on land values in the
next 12-24 months in their area, which represented a six state area.
Fifty-five percent indicated that values would increase by 10-24%,
however none felt more bullish at 25% or above. Thirty-one percent were
less bullish estimating 1-9% over the period. Concerning the bears, 14%
indicated that land values would remain about the same or decline.
To read this article in its entirety, click here: cornandsoybeandigest.com/ag-issues/views-agricultural-lenders-1/.
By Dave Kohl
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As Land Values And Rental Rates Rise, Profit
Margins Fall
Land Prices and cash rents are expected to continue to
rise -- possibly at double-digit rates -- across the Midwest into
2008.
And given the heightened demand for commodities -- induced in part by
the burgeoning ethanol market -- healthy annual increases in land costs
are likely to continue for years to come. The profits from raising a
crop could shrink as earnings from higher commodity prices get bid into
land prices and cash rents.
Earnings in 2007 will be decidedly higher than in 2006, perhaps adding
fuel to an already hot market. According to a USDA report issued in late
August, net farm income is expected to reach a record $87.1 billion in
2007, up 48% from 2006.
"Farmers have a tendency to bid excess profit into the land," notes Mike
Duffy, who tracks Iowa farmland prices at Iowa State University (ISU).
"In the long run, the profit margin narrows as rents and land values
rise."
Indeed, farmers were the biggest players in the farmland market over the
past year. They outpaced investors even in states such as Illinois,
where investors have bought more land than operating farmers have in
recent years.
"The investor group has a lot of money and is trying to compete, but
farmers are the dominant force" in the Midwest land market today, says
Murray Wise, chairman and chief executive officer of the Westchester
Group, a farm management and real estate company based in Champaign,
IL.
"There is more demand for farmland today than there has been for 40
years," he says. "We are in a euphoric period."
To read more of this article about farmland market demand, click here:
farmindustrynews.com/shop-office/business/farming_land_grab/.
By David Hest
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Iowa Integrated Crop Management Conference
And Agribusiness Expo Nov. 28-29
The Iowa State University Integrated Crop Management
Conference and the Agribusiness Association of Iowa (AAI) Agribusiness
Expo will be held Nov. 28 and 29 on the Iowa State University (ISU)
Campus.
Conference attendees can choose from 42 different workshops that offer
the latest information on crop production and protection technology in
Iowa and surrounding states. Workshops are offered by ISU faculty and
staff and invited speakers from around the Midwest. To view a list of
the workshop topics, click here: www.aep.iastate.edu/icm/workshops.html.
The Agribusiness Expo presents a comprehensive collection of new and
innovative products covering all facets of the agribusiness industry.
Over 75 exhibitors will be present for this year's Expo, held in Hilton
Coliseum.
Registration for the 2007 Integrated Crop Management Conference and
Agribusiness Expo is now open. To register online for this event or for
more information, visit the Agribusiness Education Program Web site at
www.aep.iastate.edu.
Companies interested in exhibiting at the Agribusiness Expo should
contact Joan O'Brien, at (515) 262-8323, or via e-mail at joano@agribiz.org.
Source: Iowa State University
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Missouri Snow
Plows To Test Soy-based Paint Performance
Are highways and soybeans a good fit? That's what the
Missouri Department of Transportation (MoDOT) is trying to find out.
MoDOT is testing four types of yellow and white soy-based paint that
contain varying amounts of soybean oil to see how they work for highway
striping. The soy-based paint is made by using the same raw materials
and processing techniques as traditional, water-based paint except the
soybean oil replaces some of the petroleum ingredients. Soy paint is
considered to be more environmentally friendly than other paints because
it's made from soybeans, a renewable agricultural crop that is plentiful
in Missouri.
The 12-foot test stripes, which are located on Route 63 just north of
Jefferson City, run across the roadway - from the shoulder to the center
stripe. That way, the paint can be tested for how well it sticks to the
ground and holds up against tire wear. MoDOT will also be looking to see
how the paint withstands the ultimate test: snowplow blades.
"Snowplows are the Achilles heel of any highway paint," says Todd
Bennett, MoDOT's chemical laboratory director. "As we monitor the wear
and tear of the paint over the next year, we'll especially be looking to
see how durable it is in winter weather."
MoDOT has been working with the Missouri Soybean Merchandising Council
to test the paint, which was developed by Cargill.
"Missouri soybean farmers are pleased to work with MoDOT and our
industrial partners to find new ways for soybeans to be used," says Dale
R. Ludwig, the council's Executive Director/CEO. "Finding new uses for
soybeans is good for the rural economy and the environment."
The state transportation department typically buys about 1.5 million
gallons of water-based paint a year. Missouri, which ranks seventh in
the nation in soybean production, last year produced more than 194
million bushels of soybeans valued at $1.2 billion.
Source: Missouri Soybean Association
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A Loaf Of Bread, A Gallon Of Milk And A Case
Of Dynamite
I went out to dinner one night and saw an old friend,
Ray, at the restaurant. We can't bring up Ray without telling one of the
best tales I've ever heard.
Back in the old days before meddling government bureaucrats sucked the
fun out of everything, you used to be able to go to the general store
and buy dynamite over the counter like aspirin and soap. It came in
handy around the farm. You could get rid of those pesky beavers that
were damming up the creek and flooding out your crops or you could clean
out those fencerows and get rid of some of those bothersome tree stumps.
Ray liked this last feature quite a bit.
One day, Ray was out blasting stumps along a fencerow. He'd pile up the
dynamite, light the fuse and blow a stump sky high. The team of horses
could then be brought in to pull the stump carcass out of the way.
Ray was making good time near a road fence across from his neighbor's
buildings. The neighbor saw what was happening and came over to inform
Ray that he had no idea what he was doing and would surely end up
killing somebody in the process. He encouraged Ray to cease and desist
immediately. Ray saw things differently. He informed the neighbor that
he DID know what he was doing and was not about to stop. The neighbor
threw up his hands in disgust and left.
Ray proceeded to stack a very large quantity of the dynamite on one side
of the stump closest to the field. He lit the fuse and backed up. The
extra-large, off-center charge and the laws of physics combined to send
the stump high into the sky with a trajectory such that it landed right
in the neighbor's front yard!
The neighbor had no further objections.
To read more articles from Jeff Ryan, click here: farmindustrynews.com/jeffryan/.
By Jeff Ryan
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Do Preventative Foliar Fungicide Treatments
Pay Their Way?: A Note From The Soybean E-Digest
Editor
Does it ever pay to apply a preventative foliar
fungicide treatment before disease problems occur or is always better to
wait and apply fungicides when you can confirm that a disease is present
and will likely cause yield loss? That's a question one Soybean
E-Digest reader wants to know.
If you have an answer that you're willing to share with other readers,
I'd like to hear from you. Just let me know who you are, where you farm
and what your experience has been with applying preventative fungicide
applications to soybeans. I'm hoping to hear from farmers, researchers
and custom applicators.
If you have any other ideas on what you'd like to see covered in a
future issue of the Soybean E-Digest, or if you have concerns or
questions about this issue, please write me (John Pocock) at: jpocock@csdigest.com.
Thanks for your readership.
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