October 8, 2007

Soybean rust will not impact soy market's bullish run

As soy prices neared US$9, many worried that the discovery of soy rust last week would cause a downward shift in the markets.

But it will not necessarily be the case, according to Elaine Kub, DTN Commodity market analyst. She said soybean rust is basically a "non-event in the United States when it shows up at this time of year" and its impact "is too late to do any damage to soy yields, so even the confirmed sighting as far north as Iowa won't affect the markets."

David Kruse, president of Commstock Investments also shared the same observation, stating it is too late in the season for this to have any impact, adding had this report come in late July, "it would have been a different story."

In fact, Kruse believes that the education and proactive spraying done by farmers in hopes of keeping soy rust at bay has actually increased soy yields.

Farmers are more tuned in to fungicide use as a preventative measure, he said, and this is important because other diseases that typically would have had a negative impact and create smaller soy yields are being driven off by fungicide use despite not having rust present.

Yet as farmers begin to make decisions for next year's crop, the issue of soy rust remains a concern to many.

Kub said in any case, going into next year, soy producers in the South, where soy rust does show up a little earlier, will keep their eyes out for management techniques and consider that in their net profit estimations. Though she doubts that will affect overall planting decisions, soybean rust hitting R5 or R6 stage, could warrant some bullish concern.