Waterloo Cedar Falls Courier, IA
06-11-07
Soybeans along for the ride
By MATTHEW WILDE, Courier Staff Writer
DUNKERTON --- Historic cash corn prices may be grabbing the headlines, but
soybeans are profitable too.
Grain experts said farmers shouldn't be too quick to dismiss soybeans as a
money maker. Producers with beans still in the bin and those that didn't totally
abandon the traditional corn-soybean rotation this year should make some green
from Iowa's most popular legume.
"If you see opportunities to lock in good margins, probably do it," said Bob
Wisner, the state's leading grain economist from Iowa State University.
However, he said the market should reward farmers with storage space and
those able and willing to hold on to soybeans for future sales.
Corn prices started their uncharacteristic and meteoric rise last harvest, when
prices are historically at their lowest. The demand for ethanol hit the corn market
like a sledgehammer, nearly tripling its value, topping out in February at more
than $4 per bushel at local elevators and nearly $5 on the Chicago Board of
Trade. Cash prices have since regressed to a still very profitable $3.55 last week.
The 10-year highs convinced some farmers to reduce soybean acres or plant
100 percent corn this spring. Wisner said that's understandable given the market
indicators. Soybeans are plentiful --- a record 1.78 billion bushels were in storage
nationwide on March 1 --- and Brazil, the United State's main competitor, recently
harvested a record crop.
The signs point to suppressed soybean prices. Instead, soybeans quietly
followed corn.
In September 2006, cash beans in Northeast Iowa averaged $4.76 per bushel.
Early last week, local cash prices topped $7.30 and beans for January 2008
delivery were $8.66. Current Profit margins range from nearly $1 to more than $2
per bushel, according to locally adjusted ISU cost of production figures for the
2006 and 2007 crop years.
Instead of reacting to current market conditions, Wisner said buyers are looking
years into the future. Thus, keeping prices artificially high.
"The grain trade is expecting most corn to get planted and a sharp drop in bean
acres. That's driving the market, Wisner said
"The other influence is the fund traders moving back in, looking long term that
even more corn will be planted next year for ethanol," he continued. "There's
plenty of beans to go around now ... but fund traders are looking three to four
years out. Will beans be like corn --- go from adequate supplies to tight in less
than a year? The big fund traders see it as an opportunity to get in before the big
price moves."
The United States Department of Agriculture Prospective Plantings Report said
90.5 million acres of corn was expected to be planted nationwide, up 15 percent.
If realized, it will be the highest acreage since 1944. Iowa's corn crop is
estimated at 13.9 million acres this year, up 10 percent.
On the flip side, soybean acres nationwide are projected at 67.1 million, down 11
percent. Iowa's acres dropped an estimated 9 percent to 9.2 million.
Grain marketers said the soybean market could jump again after the USDA
releases the official acreage report on June 29.
"Look at historical figures, beans shouldn't be as high as they are," said Wil
Manweiler, Dunkerton Co-op grain department manager. "... Beans are riding the
shirt tails of corn."
Contact Matthew Wilde at (319) 291-1579 or matt.wilde@wcfcourier.com.