How Long Could This Soybean Rally Last?

May 2, 2016 05:00 AM

As soybeans continue to stick above $10, farmers and analysts are finding themselves riding a spring rally they never expected—for better or for worse.

“The drought was crazy, but this was about as nuts as it gets,” said Tommy Grisafi of Advanced Trading, speaking on U.S. Farm Report, about last week’s soybean market. “People were excited. I actually saw some people call in … (and say) they had forward sales in beans at $9, (asking) ‘What do I do now?’”

In other words, these growers were living one of their worst marketing nightmares.

“You could see that people had already given up control of the bushels at a lower price, and they were panicked,” Grisafi said. “I actually saw more … anger or disgust that we were rallying and that’s not what the farmer should be thinking. It’s a heck of an opportunity. We went from maybe a $50 loss per acre to a breakeven to an instant profit.”

“There’s a lot of confusion,” noted Joe Vaclavik of Standard Grain, also speaking on U.S. Farm Report. Farmers are asking “’Why is the market up? What’s going on? Why did I sell early?’” Vaclavik recounted, “but you can never complain about better prices. Every farmer in the country just went from a loss to a profit in beans in six weeks, and you’ve got to think of that as a good thing, even if you did make some early sales. … We didn’t want that market to stay cheap.”

The good news for growers who fear they may have missed out? This rally could have some staying power.

“According to the spreads at the Board of Trade, (the rally could last) a while, because you see (futures) for this November and November ’17 trading 50 cents over,” said Grisafi. “The market wants your soybeans. It wants them at harvest. It has a very high front-month premium, and so the front months are a bit above $10. When you look further out … we go back toward that $9.40, $9.30 level. It looks like the next 12 months have a story.”

Vaclavik agreed.

“The best thing about this rally in the bean market is that we did it without a U.S. production problem,” he said. “Farmers still have all the potential in the world to grow a big bean crop, put a record yield out and capitalize on these prices, so that’s the best thing about it.”

It represents a significant shift in the soybean market. “Two months ago, everyone thought if the bean market rallies, it’s going to be because of a drought this summer,” Vaclavik said. “That’s not what we saw … We’ve had a little bit of shift in supply and demand. We’ve got Argentina crop problems. We’ve got some better exports. Crush margins have improved drastically since the first part of March.”

Add all those factors up, and the answer is $10 soybeans.  “The landscape of this thing has changed quite a bit,” Vaclavik said. 

Watch the segment here:

Want more video news? Watch it on U.S. Farm Report.


Back to news



Spell Check

Pierre, SD
5/2/2016 09:05 AM

  Just what the majority of the "poor marketing" farmers need. More false hope!! And they will sit on their hands (and millions of bushels) and not do anything, and watch the market drift lower over the summer, and then "whine" about "No money" in farming, as they sip their martinis from the decks of their million dollar "mini-mansions" that they never should have bought nor built in the first place. "Poor Me" or pour me another??

Delta, MS
5/2/2016 04:39 PM

  Never ceases to amaze me the ignorance some people have with agriculture Jack...all I can say is go ahead and jump in if the gravy is so good. Wonderful how the market has etched upwards. Has been a gloomy spring thinking about planting a crop that has no value. Great to see some positive momentum as we venture off into this crop season.

Greensburg, IL
5/3/2016 09:35 AM

  Just goes to prove NO ONE can predict weather and/or markets associated with weather. Who would of predict record flooding in Argentina in APRIL? And if Argentina hadn't seen flooding, they were on course for a bumper crop and we'd been whining about $8 beans again. As always someone loss is another man's gain. Just need a better crystal ball. The good news we pick up market share in the world (mostly likely meal) since Argentina export much less than their counter-parts in Brazil. One thing no one seem to mention is how did corn fare in all this in Argentina?


Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer