The USDA’s August Crop Production report had a few surprises for the soybean industry.
A resurvey of soybean acres in 14 states reduced the forecasted 2013 harvest by 500,000 acres from the June 28 crop production report.
Average yield is forecast at 42.6 bushels per acre for a 3.255 billion bushel U.S. soybean production in 2013.
The soybean carryout for 2013 does improve to 220 million bushels as opposed to 125 million bushels for the 2012 crop. The 220 million bushel carryout does indicate a tighter crop than earlier anticipated.
The USDA – in their August World Agricultural Supply & Demand Estimates (WASDE) report – raised the average farm gate price of 2013 soybeans to $10.35-$12.35 vs. $9.75-$11.75 per bushel in their July report.
At one elevator in western Minnesota followed in this column, the cash price of soybeans on Aug. 16 was $13.35 per bushel with a basis of 75 cents over. Compared with the price offered on Aug. 2 of $12.32 – the price was $1.03 higher, and the basis was 25 cents higher.
At this same elevator, the bid for new crop soybeans was $11.99 per bushel with a basis of 60 cents under for October delivery.
“There are a lot of sales that have not been made. That $13 November mark is a very difficult level to break through, but we’re not that far away from it. If you think you need to be making sales, because you don’t have enough sold, I would target the $12.90 futures,” said Betsy Jensen, grain marketing analyst and farmer from Stephen, Minn. Jensen is also the editor of “Prairie Grains.”
On the CME Board the soybean futures on Aug. 16 traded with September at $12.82, November at $12.585, January at $12.60, March at $12.505 and May at $12.34 per bushel.
Compared with prices on Aug. 2, September was 70.5 cents higher, November was 78.5 cents higher, January was 75 cents higher, March was 62.5 cents higher, and May was 45 cents higher.
The market turned to an inverse model once again – paying less for storing beans vs. selling them right away.
“I’m worried that farmers are thinking of 2012 futures prices, and not 2013,” said Jensen, who markets her own soybeans. “I would really go home, look at the charts, and see where 2013 prices have been trading.
“In the past six months, they haven’t been to $14 or $15. That was the 2012 crop. This crop has topped out around that $13.25 mark. Just remember that November soybeans are back up to recent contract highs.”
Jensen added that the November 2013 soybean contract only traded at $14 for a short time in August 2012.
“Don’t let your memory be clouded by the 2012 crop,” she said.
Exports sales remained strong in mid-August. The USDA reported on Aug. 15 that weekly export sales were 1.893 million metric tons (69 million bushels), and an additional 410,000 tons (15 million bushels) in sales were announced on Aug. 16.
“The U.S. dollar index gets ignored during the summer, but it’s definitely something that farmers may want to take a peek at,” said Jensen, adding that the dollar’s value has declined since hitting a three-year high in July. This improves the opportunities for foreign buyers to purchase U.S. soybeans.
She pointed out that the Chinese economy is starting to slow down. It’s growing, but at a slower pace.
“China continues to grow, but it is not the freight train coming through like it has been for a few years,” she said.