March 5, 2004

 

 

US Soybean Prices At Highest Level 15 Years

 

Soybean prices in the United States have surged past $9 per bushel, their highest in more than 15 years and nearly twice what they were a year ago.

 

But the high prices don't make a difference to Plainville farmer Dan Cole. Like the majority of other area soybean growers, Cole has no beans left to sell.

 

"I was all sold out at $7.26," said Cole, who raises corn, soybeans and cattle near Plainville.

 

Experts in July predicted a bumper soybean crop with prices in the high $4 per bushel range. So when prices hit $6, Cole and most other farmers locked in a sale.

 

A year ago, soybeans sold for $5.50 per bushel, the same price for the past three or four years.

 

"As prices started creeping up to $6, producers thought this is great. A lot of soybeans got priced between $5.50 and $6.50. If you look back over the last four years, it was an excellent price," said Mike Roegge, a crop systems educator with the University of Illinois Extension Adams/Brown Unit.

 

"We had no idea the price would continue to go up like it has," Cole said. "I have a few neighbors, the older generation in their 70s, who typically clean out last year's crop to get next year's in, but they all sold out. That means there aren't any beans around here in the bin."

 

Producers like Cole had no idea prices would continue to rise, with May contract beans closing Wednesday at $9.43, up 14.5 cents a day after profit-taking prompted by a rumor that China had canceled some planned imports.

 

Soybean prices haven't been this high since the summer of 1988, said Darrel Good, a crop marketing specialist at the University of Illinois. Unless factors that influence the market change dramatically, the price could go past $10 per bushel "certainly within a few weeks," he said.

 

Prices could drop as area soybean processing plants shut down due to low supplies. "They don't want to operate at unprofitable levels," Cole said.

 

A decision by South American growers, or even U.S. growers, to plant more soybeans could spur overproduction and also drop prices.

 

But with corn prices around $2.80 for new crop, "it won't mean more soybeans will be grown at least east of the Mississippi River," Roegge said. Missouri farmers may look at shifting more acres to soybeans, he said, especially on poorer quality soils because beans tolerate dry weather much better than corn.

 

Illinois harvested 374 million bushels of soybeans in 2003, but bad weather late in the growing season caused a 12 percent drop in production nationwide from 2002. In Illinois, yield averaged about 37 bushels per acre, the lowest since 1988, and the national average was about 33 bushels per acre.

 

That pushed prices to more than $7 in October, and they continued to climb since then.

 

Paul Bates, a broker for Bates Commodities Inc. in Normal, remains optimistic prices will stay strong because of low supplies of corn and soybeans, but he said predicting how high the price will go is foolish. "The truth is none of us know. We'll have to let the market work that out," Bates said.

 

"The concern now is that the Brazilian crop is not finishing well," Good said. "The next thing that's going to be important is our own growing season this summer. If we should have any kind of problem with our own crop, that's when you could really blow the top off of it, I guess."

 

Factors that could hurt the U.S. crop include bad weather and soybean aphids. Producers also worry whether soybean rust, which has cut yields up to 60 percent in South American fields, will reach the United States.