What is in this article?:
- Soybean price swings reflect changing supply, demand expectations
- Planting progress supports yield potential
• November 2012 soybean futures reached a high of $14 in September 2011, declined to about $11.20 in December 2011, rebounded to almost $14 in early April and again in early May 2012, and traded to a low of $12.45 in the current trading session.
• Much of the strength in soybean prices during the first three months of this year reflected deteriorating production prospects in South America.
Planting progress supports yield potential
“One factor that should support yield potential is the small percentage of the crop planted late this year,” Good said. “Late planting can be characterized in a number of ways since production occurs over a large geographic area, planting occurs over a period of several weeks, and planting has generally occurred earlier over time.
“We have defined late planting as the percentage of the crop planted after May 30 in the major soybean-producing states included in the USDA’s Crop Progress report. Based on that definition and weekly planting progress reported by the USDA, we estimate an average of 34 percent of the crop was planted late in the 26 year period from 1986 through 2011.”
Good reported that the smallest percentage planted was 13.6 percent in 2000. Some of the late planting each year reflects soybeans planted following winter wheat harvest.
“Only 11 percent of the crop was reported as not yet planted as of May 27 this year, so a new record low percentage of the crop was planted late this year,” Good said.
“With an early harvest of the soft red winter wheat crop, even most double-cropped soybeans will be planted in a timely fashion. Timeliness of planting is not the most important factor in determining yields, but an early-planted crop suggests a higher yield potential than if an average percentage of the crop had been planted late,” he said.
Beginning this week, Good said the USDA’s weekly Crop Progress report will include an assessment of soybean conditions.
Historically, there has been a positive relationship between the percentage of the crop rated in good or excellent condition at the end of the season and the magnitude of the U.S. average yield relative to trend.
Early-season ratings are not always indicative of end-of-season ratings. On average, the percentage of the crop rated in good or excellent condition at the end of the season since 1986 was six points lower than at the beginning of the season. End-of-season ratings exceeded those at the start of the season in only four of those 26 years.
“Still, yield expectations will follow weather developments and condition ratings over the next three months,” Good said.
“On the demand side, the pace of exports and export sales will be one of the most important price factors as the world adjusts to the small South American crop and troubling economic conditions,” Good said. “Export commitments for the current year ending August 31 exceed the USDA’s projection of 1.315 billion bushels for the year, which is not unusual,” Good said.
He added that sales for delivery during the 2012-13 marketing year had reached 393 million bushels as of May 24, the most ever for this early in the year, and that 77 percent of those sales were to China with 18 percent going to unknown destinations.
“The small South American harvest and the strong pace of export sales suggest that soybean prices will be very sensitive to U.S. production prospects,” Good said. “Substantial price swings are likely to continue, providing producers with opportunities for additional sales of the 2012 crop.”