A week ago, the price of soybeans tumbled as news of a scandal in the Brazilian government developed. The price decline on one piece of political news, provides an indication of the precarious price situation.
Todd Hubbs is an agricultural economist at the University of Illinois. He has been and continues to advise farmers to sell new crop soybeans, and he has a timeline, too.
“There is only one direction I see soybean prices going, and that’s downward. As we move to the summer, yeah we’ve seen some bad and difficult weather early in the crop year,” Hubbs says. “Pricing soybeans particularly with the 2017 crop, if you can get a good price before that June 30th acreage report I think you might be pertinent to do that.”
Corn, on the other hand, is a different story.
It starts with the lower number of acres farmers told USDA they were going to plant this season.
It was down some four million from last year when USDA took the survey in March. And that thread – maybe now a threat – of lower acreage has been complicated by the weather.
“We’ve seen this real issue with planting, re-planting is not a good thing for yield normally. Will we see a huge yield last year like we did with corn? It’s hard to say, but I think moving into the summer you’ll see much larger movements in corn prices probably then in soybean prices,” Hubbs explains.
Support which should provide a marketing opportunity for both old and new crop corn.
Hubbs summarizes it this way.”If you get a good rally in the summer corn prices I think you’ll have an opportunity to price them. Soybeans on the other hand, after the June acreage report, we’ll have to see how it shapes out. That could be a really bare signal to the market, and put soybean prices at a level in a rally is not going to be where you want it to be.”
The risks associated with waiting for a summer price rally is larger for soybeans for several reasons.
Soybean acreage is more likely to surpass planting intentions.
Soybean yields may be less vulnerable to summer weather problems.
Finally soybean prices appear more vulnerable to downward movement given the state of domestic and global supplies.
