March 23, 2004

US Soybean Prices Expected To Hit $11 Per Bushel This Week

Soybean prices in the United States hit $10.33 per bushel, the highest levels in 30 years fears of a soybean shortage mount over a reduced domestic crop, speculations of a smaller Brazilian harvest in as a result of the Asian rust fungus, and transportation problems in Brazil's main soy exporting port.

Soybean prices are up 59 percent from $6.50 per bushel last September. Some analysts believe that soybean prices could hit $11 this week. Last year, U.S. farmers harvested 2.4 billion bushels of soybeans, down 11 percent from 2.7 billion in 2002, according to the National Agricultural Statistic Service. Drought conditions reduced yields across the country, including in the big soybean producing states of Iowa, Illinois and Missouri. Illinois averaged 36.5 bushels per acre in 2003, down 15 percent from an average of 43 bushels per acre in 2002.

Last year, Kansas farmers harvested 57 million bushels of soybeans, down 2.3 percent from 58.4 million in 2002 and down 34 percent from 87.3 million in 2001. Prices were strong last fall, averaging $7.60 per bushel, but the yield averaged only 23 bushels per acre in Kansas. Because the price was high, Kansas farmers made $433 million in 2003, about $70 million more than in 2001, when the yield averaged 32 bushels per acre, according to the National Agricultural Statistics Service.

Pete Loewen, partner with AMC Trading in Manhattan, said there is an "insatiable appetite" for soybeans worldwide. Soybeans are a great source of protein for feeding livestock. It also is used in the production of dairy and pet products. Demand for soybean oil also remains strong.

Loewen said estimates for the soybean crops in Brazil and Argentina were lowered recently.

"We're close to not reaching world demand," Loewen said.

He expects some soybean crushing facilities to shut down to ration supply.