Soybean yields have been steadily increasing through technology, says Davis. While the USDA has revised its yield projection downward, it still will be record-large for 2010. An increased carry-forward from this past year added to a potentially record crop for this year could result in the second largest total supply on record.

Exports, he says, have been the “savior” for the U.S. soybean market. “Last year, we had record exports at 1.495 billion bushels. Currently, USDA is projecting the second largest export amount at 1.485 billion bushels. That’s good because crush is being reduced. There are fewer heads of hogs to feed, though there might be an increase in broilers. In general, they’re looking at crushing the smallest amount since the 2003-04 marketing year.”

Soybean exports, says Davis, have been steadily improving. Two-thousand and nine was a tremendous year. We started out strong and benefited from production problems in South America — they’re our biggest export competitor. It’s really early in the marketing year, so it’s difficult to make any strong statements about where we are compared with last year. We are somewhat slightly ahead of last year. In mid-September of last year, we had exported 19.8 million bushels. This year, we’ve exported 22 million bushels.”

Price trends show that in 2006-07, the marketing average price for U.S. soybeans was $6.43 per bushel. “Then, we had a large reduction in acreage and corn was that rising tide that lifted a lot of boats, on the row-crop side.”

The crop price has worked its way down from $10.10 per bushel, and USDA’s current estimate of average price for the 2010-11 marketing year is $9.15 to $10.65 per bushel. Uncertainty, says Davis, is still reigning in the soybean market.

In the mid to late-1990s, he says, the U.S. was drawing down stocks-to-use but the price wouldn’t budge. In 1995, Roundup Ready technology and no-till production systems arrived on the scene in South America, and Argentina and Brazil doubled their soybean acres.

“A lot of pastureland in Argentina and Brazil was converted to row crops due to economics. Soybeans were so much more profitable. Argentina went from producing 459 million bushels of soybeans to a little over two billion bushels, and Brazil went from 808 million bushels to 2.3 billion bushels.”

A lot of their production, he says, came from acreage that decimated their fed cattle sector.

On a world basis, says Davis, ending stocks are actually projected to be building through the end of the current marketing year. “Stocks are building in the U.S. and drawing down slightly in Argentina, Brazil and China.”

phollis@farmpress.com