The Soybean Dilemma: Fewer Acres and Current Demand Means Stocks are Scary Tight
Soybean Markets 041321
U.S. soybean farmers could be in for a volatile price ride this year. USDA's late March Planting Intentions report showed farmers intend to plant fewer acres than USDA thought in February. And with already tight stocks with robust demand, Blue Reef Agri-Marketing's Chip Nellinger says soybean prices could see extreme volatility this year.
“If you look at the acres that USDA told us on that March Prospective Plantings report, and with just a trendline yield, combined with a demand number that's anywhere close to what we're seeing with old crop, and we cut the carry out even further," says Nellinger. "Essentially, we're out of beans."
Nellinger says something has to give in the market. He thinks U.S. farmers either have to produce high enough yields to ease the tight stocks picture, or prices will become high enough it could ration demand.
"If there's any type of a threat to the crop going forward, whether that's hot and dry weather in the July, June, July, August timeframe, whether that's additional Chinese demand that we see uncovered here in the coming months, it could be explosive to the upside," says Nellinger. "So, I'd say buckle your seat belt and get ready for some volatile price action ahead of us here in the next few months."
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