Soybean export projections are lowered

     The U.S. Department of Agriculture (USDA), on March 8, lowered soybean export projections and increased ending stocks. The USDA and trade also expect more soybeans will be planted nationwide than last year, which could add to already big supplies.

     For months, soybean prices have escalated, primarily due to supply worries created by drought conditions in Argentina. May soybeans on the Chicago Board of Trade closed at $9.72 per bushel on Jan. 12 and $10.77 per bushel on March 5. May beans today closed at nearly $10.62 per bushel, down a little more than a penny from the opening bell.

     Cory Bratland, chief grain strategist with Kluis Commodity Advisors of Wayzata, Minn., thinks the recent rally may be coming to an end.

     “There are indications that beans may be running out of gas,” Bratland said March 8 during a webinar with clients and ag industry officials following the release of the USDA World Agricultural Supply and Demand Estimates (WASDE) Report.

     The following are soybean highlights from the report:

     • U.S. crush raised 10 million bushels to 1.96 billion bushels.

     • U.S. exports reduced 35 million bushels to 2.065 billion bushels.

     • U.S. ending stocks are projected at 555 million bushels, up 25 million from last month.

     • Argentine production forecast at 47 million metric tons, down 7 million from last month.

     • Brazilian production raised 1 million metric tons to 113 million metric tons.

     • Global ending stocks are projected at 94.4 million metric tons, down 3.7 million from last month.

     • The season-average U.S. price is pegged at $9 to $9.60 per bushel, unchanged at the midpoint.

     Commodities broker Al Kluis, managing director of Kluis Commodity Advisors, believes soybean farmers have reason to be optimistic – a view he shared recently at Commodity Classic in Anaheim, California. Even though the latest WASDE Report was somewhat negative, he said long-term fundamentals are promising.

     Kluis said South America’s soybean production may be down 700 million bushels from last year.

     “Global economic growth is good. When that happens, people want to eat more protein,” Kluis said.

     Bratland added, “World soybean demand is still very strong … and the U.S. has a superior product. Whether people are buying from us or somewhere else, the world is chewing through stocks.”

     Dave Fogel of Advance Trading, Inc. of Bloomington, Illinois, recently told farmers at Commodity Classic that selling grain into a rising market with narrow basis levels provides the best opportunity for profit. He recommended buying put options, among other things, to establish a price floor while still being able to benefit if prices continue to escalate.

     “Grain marketing is simple, it just isn’t easy,” according to Ed Usset, grain marketing economist at the University of Minnesota, who presented to a standing-room-only audience of farmers at Commodity Classic.

     Usset was a panelist alongside Bryce Knorr, Farm Futures senior market grain analyst, and Matt Bennett, Channel Seed marketing consultant, for a lively debate on what 2018 has in store and how farmers can write marketing plans to improve their bottom lines. The panel advised that despite tight margins and trade uncertainties, profit opportunities do exist — if producers are willing to take them.

     “Challenging times bring opportunities,” said Bennett, who also farms 3,000 acres of soybeans and corn in Illinois. “You need to be prepared to honestly ask yourself a host of questions: ‘How well do I know my farm?’ ‘Can I make money at these prices?’ ‘Will my farm income support my lifestyle?’ ‘And what am I willing to do if it doesn’t?’”


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