Aug 22, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

From the Editor

RSS By: Brian Grete, Pro Farmer

Pro Farmer Editor Brian Grete takes time to talk with Pro Farmer Members about some of the key issues in each week's Pro Farmer newsletter.

We need to be a reliable soybean supplier!

Jul 27, 2012

Chip Flory

From The Editor

July 27, 2012

Hello Pro Farmer Members!

What a week... and I even missed the first two days of it while I was in Colorado to celebrate my Aunt Judy and Uncle Richard's 50th wedding anniversary! But the three days I caught were plenty!

I made a really big deal earlier this week about USDA's "Greening Update." If you haven't seen what was on the site, please go read it now.

What really upset me about it is there just doesn't seem to be anybody "minding the store" on some critical issues... and too many of these issues involve animal agriculture. So USDA's cafeteria promoting "Meatless Monday" so you can help "improve the environment" and to "not waste resources" just about made me scream.

And when I got in the office on Wednesday, the grain markets were under some hefty pressure. That's despite what I felt was the roughest day of the year for the corn crop that day. It was 104 in Cedar Falls with a stiff wind blowing. We got some light rain that night, but it was falling on a far-smaller corn crop than had the rain come just two days earlier. The U.S. corn crop lost a lot of bushels early this week, but the promise of some cooler temps and maybe even some additional light, scattered rains but the corn and soybean markets on hold.

I don't think there's any question the grain markets have move work to do to factor in the lost bushels. And even if grain prices do reflect lost bushels, they haven't risen high enough to choke off enough demand to maintain an "acceptable" level of carryover at the end of the marketing year. What's acceptable? About a 5% stocks:use ratio for corn and a 4.5% ratio for beans.

Also... the last paragraph of the feature article on News page 4 this week almost didn't make it in. I had to cut a few things to make sure it made it... and it might be the most important piece in the entire newsletter. Here it is:

"Fix it with more 2013 bean acres? Not likely. Nov. 2013 bean futures are trading about two times the price of
Dec. 2013 corn futures. At that price relationship, corn acres are set to climb — and bean acres to fall — in 2013."

The bean:corn price ratio is about 2:1. I've had many producers tell me they aren't interest in increasing bean acres unless the price ratio is closer to 2.8:1 or even 3:1! The reason the ratio is so low right now is because of expectations of a big South American crop. But a big South American crop won't fix an exceptionally tight stocks situation here. And that's where the risk is for U.S. soybeans going forward. We've never given South American producers as much incentive to increase acres as we are right now -- and they will respond. That means Brazil and Argentina will be securing a bigger share of the Chinese marketing in the 2012-13 marketing year and South America stands a good chance of becoming the "reliable supplier" of soybeans (which means the "supplier of choice") for China. If it happens, it'll take years to rebuild the U.S. soybean export market.

That's why the "acreage battle" for 2013 acres in the U.S. should get started very soon. November 2013 soybean futures have to start gaining on December corn futures (in a big way, and fast) as growers are making acreage decisions this fall. If not, we'll put down a pile of nitrogen that will lock in a huge amount of corn acres for 2013, potentially making beans an "after thought" in the U.S. crop mix.

That's it for now...

Hey - tomorrow is my son Tom's 17th birthday! If you're on Twitter, drop a birthday greeting to @tflory19! Tom will be doing final preps this weekend on his market steer (Tank ~1,400 lbs) and his market heifer (Crazy Girl ~ 1,200 lbs) for the Bremer Co. Fair next week.

And you can follow me on Twitter: @ChipFlory


To join Pro Farmer, click here!

Log In or Sign Up to comment


No comments have been posted, be the first one to comment.
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by|Site Map|Privacy Policy|Terms & Conditions