Soybean prices have traded in a wide range over the past two months, but fundamental developments have been less dramatic than in the wheat and corn markets.
Although much of the attention in the crop markets in recent weeks has been focused on wheat and corn, the soybean market is also strong and its position will be clarified in the coming months by three USDA reports, said University of Illinois economist Darrel Good.
“Soybean prices have traded in a wide range over the past two months, but fundamental developments have been less dramatic than in the wheat and corn markets,” he noted.
The wheat market has been dominated by the shortfall in production in Russia and the potential for a drawdown in world wheat stocks, and the corn market has been driven by strong domestic and world demand and by recent concerns about the size of the U.S. harvest, he said.
“Over the next month, three USDA reports will add more clarity to the supply side of the soybean market. The first is the Sept. 10 Crop Production report, which will provide a new forecast of the size of the 2010 U.S. harvest. A change in the forecast of harvested acreage is not expected, so the focus will be on the yield forecast,” he said.
The USDA’s August Crop Production report forecast the U.S. average yield at 44 bushels, equal to last year’s record and about 1.2 bushels above the calculated trend yield for 2010.
“Above-average temperatures in many areas during August may have reduced yield potential, particularly in areas that also experienced below-average precipitation during the month. For the most part, though, expectations are that the U.S. average yield potential has not been reduced enough to alter the prospects for a record large harvest,” he said.