Soybeans will be planted late this year, but it doesn’t mean the crop will be short or that prices will skyrocket.
Soybean planting has made major strides across the U.S. in the last week. As of June 9, 71% of the crop has been planted, a large jump from last week’s 57%. The five-year average for this time of the year is 84% complete.
With the soybean crop being planted later than usual this year, some have suggested it could mean a smaller crop. However Darrell Good, an ag economist at the University of Illinois, thinks the average national yield could still be high. Todd Gleason provides the following report from the University of Illinois.
I think we’re still looking at a 43 bu. per acres national average, he says. He believes the overall crop could still be large.
In its report this week, USDA pegged U.S. soybean output at a record 3.39 billion bushels from the 2013-14 harvest that starts Sept. 1. That’s a 12% increase from last year’s drought-impacted soybean crop.
Even with this large crop, USDA increased the 2013/14 season-average price for soybeans to a range of $9.75 to $11.75 per bushel, up 25 cents on both ends of the range.
The spring insurance for soybeans is$12.87. November soybean futures temporarily moved above the November insurance price, Good says. But, they have bumped back down to levels that are just marginally above that level.
One might think this production risk premium would prompt the market analysts to suggest new crop soybean sales. However, that’s not the case, at least for those producers with federal crop insurance, and consequently a guaranteed insurance price.
"I’m of the mind that we don’t need to be real aggressive in sales, if you have pretty high insurance coverage," Good says.
As for the future of soybean prices the expectation is for demand domestically and internationally to remain strong. Maybe not strong enough to warrant fourteen dollar plus soybeans, but certainly priced well above the long term average.
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