What is in this article?:
- Soybean production, consumption numbers missing
- Bigger supply question
• The USDA stocks and crop production forecasts will set the supply stage for the coming fiscal year.
• The trade will then turn to the pace of soybean consumption.
Soybean prices have been trending downward in recent weeks.
The November CME Group futures peaked at $14.65 a bushel on the last day of August. The same contract traded more than two dollars lower on Sept. 26.
The sharp decline, thinks University of Illinois agricultural economist Darrel Good, reflects the continuation of poor economic performance and concerns about financial conditions in Europe and the United States.
He says the financial problems raise serious concerns about commodity demand. However, the 15 percent decline in soybean prices over the last four weeks may be too much.
The price decline appears particularly large when compared to losses of 8 to 10 percent in the livestock and livestock product prices from the highs made earlier this year.
“One might expect demand concerns would result in larger price declines in the livestock sector than in the crop sector. It may have been that crop prices were pushed too high in August on the basis of crop concerns,” Good said.
Whether or not soybean prices have moved too low should be known very soon. USDA will release a stocks report this week (Sept. 30, 2011) and a crop production update in mid-October.
The last estimate of soybean stocks projected a 225 million bushel supply on hand at the end of the fiscal year. The fourth quarter stocks report sometimes deviates from the projections. Still, the Illinois economist says it would take a large deviation to substantially alter the supply outlook for the current year.