Have Soybeans Peaked?

A strong case can easily be made that soybean prices have peaked, certainly for new-crop months, for the time being.

Informa Economics and Allendale both issued sharply higher planting estimates for the US 2009/10 crop on Friday, the forma (ha ha!) coming out with 78.9 million acres and the latter with 78.484 million.

That puts plantings some 2.5-2.9 million acres higher than the USDA's March estimate of 76.024 million acres, and even that estimate was an all-time record for soybeans.

The current highest area ever planted was last season's 75.718 million.

Very early indications from Argentina are that they will plant a substantially increased acreage for their 2009/10 crop. With plenty of land not going into wheat this year, Argy farmers are expected to plant 19-20 million hectares of beans for next season, up 15-20% from the record 16.6 million planted last season.

Despite the controversial export tax, the soy market is not vulnerable to the political tinkerings with export permits that have until recently brought the trade in Argentine wheat and corn to a standstill.

All this rather makes $10/bushel beans look like one hell of a sale for new-crop positions, and has a strangely reminiscent feel to that of the wheat market twelve months or so ago.

Back then, the world & his wife planted wheat everywhere 'including their own backyard' leading to the bumper 2008/09 production that is still depressing the market even now.

It should come as no great surprise therefore that with spot beans over $12 and new crop over $10, US farmers decided to start readying their own back yards once again, this time for beans.

With spring wheat and corn plantings delayed in some areas, the carrot going for beans at $10+ instead seems to have proven to be a no-brainer.

Interestingly, despite broadly concurring on soybeans, Informa and Allendale are miles apart on corn acreage. Informa say 83.111 million and Allendale 84.775 million. in March the USDA came out with a surprisingly optimistic (even then, before the rain) 84.986 million.

Informa clearly see plenty of corn acres being switched into beans, either by virtue of some US farmers being unable to get their corn in on time, or the relatively high price of beans proving simply too tempting for others.

Allendale see it quite differently, with only a slight reduction in corn acres. Reduced plantings in Missouri, Illinois, Indiana, and North Dakota will mostly be made up by increases in Nebraska and Iowa, they say.

So where does their big soybean increase come from? Principally double cropping with winter wheat, although some spring wheat area (331,000 acres) will be switched into beans, the vast majority of these extra acres will come from newly harvested winter wheat, according to Allendale.

The USDA will be out on June 30th with their revised estimates, but before that we have planting progress and crop condition reports to look forward to tonight.

Last week the key soybean states of Illinois and Indiana, which together grow a quarter of the US soy crop, still had some 3.3 million acres (1.3 million hectares) of soybeans yet to seed.