Georgia growers planted 430,000 acres of soybeans in 2008, the most acres of soybeans since 1994 when 520,000 acres were planted. This compares to 155,000 acres planted in 2006 when prices were mostly below $6 per bushel.

Beginning in late 2006, soybean futures rallied to $7 per bushel and then traded from $7 to $12 by 2008. Soybean futures peaked just above $16.50 per bushel at the end of June 2008.

Since the peak in price, oil prices plummeted and the bottom fell out of the stock market bringing commodities futures down with them. Soybean futures prices dropped below $10 per bushel in October of 2008 and ranged between $8.50 and $9.50 per bushel in November.

Few if any analysts have confidence in projecting price for 2009. So many new factors have come into play historical relationships are not as reliable.

USDA is projecting the 2008/09 season average price for soybeans to range between $9.10 and $10.60 per bushel. They have lowered their price range due to weakening soyoil and export markets.

USDA estimates 39.3 bushels for the United States and 30 bushels pere acre for Georgia.

The U.S. harvested acreage is pegged at 74.4 million acres, up 16 percent over last year. Total production is estimated at 2.92 billion bushels, up 9 percent over 2007.

Total consumption is projected to be 2.928 billion bushels, 4 percent less than last year.

Basically, production will equal consumption for the 2008 crop and leave carryover stocks the same as last year. Thus, a relatively tight situation remains in the soybean complex. Demand, however, has weakened with the slowing global economy and credit concerns.

Will prices rally again to the highs of 2008? Not likely, but the relative tightness in soybean supply increases the probability of price rallies back above $9 per bushel as corn and soybean markets bid for acres. Production concerns during the growing season should provide pricing opportunities for 2009 production later in the year.

The expectation for the 2009 season is for a cost-price squeeze to lower net returns for growers. Commodity prices have dropped significantly from their highs in 2008 and inputs costs have not dropped proportionately. Concerns over high production costs and credit availability for operating capital would favor soybeans in 2009.

The net returns relationship between corn and soybeans in the Corn Belt favored soybeans until a recent softening in fertilizer prices making corn more competitive. The cost enterprise analysis for soybeans in late November showed variable cost increases of 36 percent for non-irrigated soybeans and 28 percent for irrigated soybeans, compared to soybean budgets from late January 2008.

• Seed: Seed cost was projected to increase last year, but the total increase due to short seed supply was not reflected in the 2008 budget. Seed prices are expected to increase again in 2009, but will probably remain stable at the retail level.

• Fertilizer: Fertilizer prices have softened from highs made in 2008. Nitrogen and phosphorus are expected to be in the 70 to 80 cent per pound of nutrient range, while potassium is expected to increase to 80 cents per pound due to tighter supplies. Lime and gypsum have gone up 40 percent from last year.

• Chemicals: Chemical costs in general are on the rise and are reflected in higher herbicide costs.

• Cost of Borrowed Funds: The interest rate charged in the budget is dependent upon what lending institutions pay for funds they lend. Most loans are based on the prime rate plus 1 percent to 2 percent. The prime lending rate has dropped recently and farmers in good financial standing should be able to qualify for a lower rate in 2009 on operating loans, estimated in the budget at 7.5 percent.

Credit availability could be a concern for some growers as lenders will likely tighten limits and look to greater utilization of FSA guaranteed loans.

• Fuel and Energy Costs: Energy prices are expected to moderate some from 2008 as oil and fuel prices have dropped back below prices at the end of 2007. The 2009 budgeted price is $2.85 per gallon versus $3 in the January 2008 budget. Given the volatility of 2008, prices could fluctuate as much as 50 percent, but are expected not to be as volatile.

The irrigated soybean budget charges an average of $9.55 per acre inch of water reflecting a 50/50 ratio of diesel and electric power sources.

• Asian Soybean Rust: In the event of Asian Soybean Rust infection, two or three fungicide applications may be necessary resulting in $10 to $30 per acre of additional chemical cost.

• Labor and Repairs: An increase in operator labor rates is reflected in the 2009 budget at $11 per hour. Machinery repairs are increased reflecting higher cost of equipment and parts.

• Breakeven Yield and Price: At the budgeted yield, non-irrigated soybeans require $8.20 per bushel to cover variable costs and irrigated soybeans require $5.84 per bushel to cover variable costs.