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Soybean Yields Jump, Sending Market Spiraling Down

November 10, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor
unstable money

Following Friday’s USDA reports, the soybean market crashed. Market expert Jerry Gulke explains analyzes the wild close to the week.

Up and down and up. That’s been the theme for soybean yield predictions from USDA this year.

On Friday, USDA released its November Crop Production and World Agricultural Supply and Demand Estimates. Soybean production was raised to 2.97 billion bushels, up 4% from October but down 4% from last year.

Soybean yields are expected to average 39.3 bushels per acre, up 1.5 bushels from last month but down 2.6 bushels from last year. Area for harvest in the United States is forecast at 75.7 million acres, unchanged from October and up 3% from last year.

But, demand for soybeans was also increased. "With the last couple reports, USDA has increased production. But, they’ve use that extra production to increase demand," says Jerry Gulke, president of the Gulke Group. The underlying thing is it is good news we can get rid of our extra, he says.

This increase in demand had a negative impact on prices. In early September, soybean prices were hovering just below $18. That price has since dropped several dollars.

Corn Yields Say Steady

For corn, USDA is forecasting total production to reach 10.7 billion bushels, which is up slightly from the October forecast but down 13% from 2011. This represents the lowest production in the United States since 2006.

Corn yields are expected to average 122.3 bushels per acre, up 0.3 bushel from the October forecast but 24.9 bushels below the 2011 average. If this is determined as the official yield level for 2012, it will be the lowest average yield since 1995.

Area harvested for grain is forecast at 87.7 million acres, unchanged from the October forecast and up 4% from 2011.

Gulke says USDA did not reduce exports for corn. "I think the government is waiting for more concrete information on if $8.50 corn sufficiently curbed demand. We’re going to have to wait until January to be certain."

Gulke encourages producers to watch the markets closely the next few days to see how they absorb Friday’s new information.

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