"Even though corn prices remain well-supported just below the
contract high of $2.75, rising soybean prices will tend to
reinforce producer decisions to increase acreage in 2006," said
Darrel Good. "As corn planting continues to be interrupted by
rain events, there may also be less incentive to increase corn
"Prospects for a record-large soybean crop in the
United States remain in place."
Good's comments came as he reviewed the soybean market, where
prices dropped sharply following the USDA's March 31 Prospective
Plantings report but have regained some of that loss. A wide
variety of factors will continue to have a bearing on price
"November soybean futures declined by about 30 cents in the
aftermath of the USDA report showing producer intentions to
significantly increase soybean acreage in 2006," Good said.
"That contract traded to about $5.85, only 43 cents above the
contract low reached in February 2005. The average central
Illinois spot cash bid dropped by 33 cents and traded within 15
cents of the marketing-year low of $5.15 established on Oct. 10,
"It appeared that prices would continue under pressure, with
the potential of new marketing-year lows in the cash market. On
April 17, however, November futures traded above $6 and were
only 13 cents below the pre-report settlement price. The central
Illinois cash price recovered by about 10 cents during the
shortened trading week ended on April 13."
Good said a number of factors have helped stabilize the
soybean price in the face of historically large stocks and
"The USDA's monthly reports released on April 10 contained a
smaller estimate of the South American crop currently being
harvested," he said. "While production is expected to be
record-large, the current estimate of 3.83 billion bushels is
nearly 75 million bushels smaller than the March forecast,
reflecting lower yield prospects in Brazil and Paraguay.
"On the export front, the Census Bureau estimate of February
2006 soybean exports was about 2 million larger than the USDA
estimates for the month. Cumulative marketing-year exports
through February were about 7 million larger than the USDA
Weekly export sales of old-crop soybeans remain brisk in
light of the large South American harvest, averaging about 13
million bushels per week for the two weeks ended on April 6.
[to top of second column]
The weekly Export Sales report also confirmed a large sale of
soybeans to China for delivery in the 2006-07 marketing year. Sales
to China for delivery next year totaled about 65 million bushels.
Sales to all destinations during the 2006-07 marketing year totaled
94 million bushels as of April 6. No new-crop sales had been
reported at this time last year.
"The new-crop sales to China served as a reminder of the large
appetite for soybeans in that country," Good noted.
Soybean prices may also garner some support from the industry
report of the soybean crush during March. The National Oilseed
Processors Association reported that member companies crushed nearly
142.9 million bushels of soybeans in March 2006 -- more than
anticipated by the market.
"The larger-than-expected crush also resulted in a more modest
increase in soybean oil stocks than anticipated," said Good.
"Finally, soybean prices have once again found support from
speculative buying, based in part on continued price increases for
other commodities, particularly crude oil and precious metals."
For producers, however, fluctuating soybean prices make pricing
"For the new crop, the bottom line is that more acreage along
with a trend yield would likely result in cash prices at or below
the Commodity Credit Corporation loan rate by harvest time," said
Good. "The market is currently offering a 2006-07 marketing-year
average farm price well above the loan rate."
With November futures at $6.02, and assuming that the monthly
average farm price will have the same relationship to futures prices
as the average of the past five years, the futures market currently
reflects a 2006-07 average farm price near $5.95.
"That is 30 cents to 35 cents above the average expected for the
current year," said Good. "The market will closely monitor planting
progress, weather and weather forecasts, and weekly crop condition
reports as they become available in order to judge 2006 production
"These factors will also provide producers with valuable
information for gauging new-crop pricing opportunities. The lesson
of a year ago is that the weekly crop condition ratings are very
valuable in judging U.S. average yield prospects."
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]