Real and perceived factors have contributed to lower soybean prices since August and to the weakness since mid-October.

“Since the first of October, November 2011 soybean futures have traded in a range of $1.20, with a high of $12.72,” reported University of Illinois agricultural economist Darrel Good.

“The price of that contract is currently about in the middle of the recent trading range and $2.50 below the contract high reached on Aug. 31.”

Good said early forecasts of another large South American soybean harvest in 2012, partially due to generally favorable weather conditions in Brazil and Argentina in the early part of the planting and growing season, is one reason for the declining price.  

“A slow start to the 2011-12 marketing year, domestic soybean crush and lagging soybean oil export sales have also contributed to the negative tone,” Good said. “In addition, concerns about world economic and financial conditions have cast a shadow over the future demand for soybeans. The USDA’s forecast of the size of the 2011 U.S. harvest increased by 29 million bushels in September, but the October forecast was back near the August forecast.”

Expectations about the November yield forecast are mixed, with the average reported expectation near the October forecast of 41.5 bushels. The forecast will be released on Nov. 9, with the final estimate of crop size due to be released on Jan. 12, 2012.   

“Another major negative factor for the soybean market has been the perception that export demand for U.S. soybeans is weak,” Good said. “The USDA currently forecasts 2011-12 marketing year U.S. soybean exports at 1.375 billion bushels. That is 40 million bushels below the September forecast and 125 million bushels below the record level of exports in 2009-10 and 2010-11. The current pace of exports and export sales are certainly much slower than that of last year.”

Good reported that through the first 9 weeks of the current marketing year, soybean export inspections totaled 257 million bushels compared to 393 million bushels during the same period last year. Unshipped export sales of soybeans as of Oct. 27 stood at 484.3 million bushels compared to 752.2 million on the same date last year. Export commitments are lower for all major destinations except Mexico. “Comparison of the pace of exports and export sales this year to those of last year may not be appropriate for judging the strength of export demand,” Good said. “