“This means that the rationing process — if we get into a situation where people feel that U.S. crop yields are really threatened and we’re headed to a reduced mid-30s national yield average —could get very, very violent.”

The U.S. has currently has open sales of 535 million bushels of soybeans, Glidewell says, all in the 2012/13 marketing year, not quite half of projected exports. “So, there’s still time to ration some exports out of the market if we have to.”

The Chinese began buying current year U.S. soybeans last fall, he says, when it became obvious the South American crop wasn’t going to be up to expectations, and they have continued to buy.

In addition to strong soybean prices, Glidewell says, basis levels have been “very, very strong historically for the fall delivery period. We’ve seen not only all-time strong soybean prices, but we’ve also seen some historically strong basis levels, delivered.”

In the soybeam meal market, he says, crushers have seen “a little improvement” in their margins in the last 30 days. “The industry has struggled over the past two years with just brief periods of profitable margins, and periods of break-even to barely below break-even.

“That’s because there was too much soybean crushing capacity in the U.S. But, the shortfall in the South American crop has brought the world buyer back to the U.S. for meal at a time when they normally wouldn’t be buying. This has helped support soybean prices, and soybean meal demand has been better than we’d expect it to be in the summertime.”

Improvement in soybean varieties and better farming techniques have allowed growers to achieve significant increases in soybean yield potential, Glidewell says.

“If we compared the potential of Mid-South soybean varieties today to those in 1985, when we were pretty pleased with 30 bushel yields year-in, year-out, we’ve come a long way to now having varieties with yield potential of 80 bushels or better.

“Mid-4 maturity beans have done a lot to accelerate yield potential in the Delta, as long as water isn’t a limiting factor. On a year-in year-out basis, Mid-South growers can produce soybean yields just as good as Midwest growers. Heat still is a limiting factor with our corn yield potential, but with soybeans, we now have excellent yield potential.”