Marketing soybeans successfully is crucial to the bottom line. "You could be the best grower in the world, but if you don't do a good job of marketing and harvesting, it doesn't make any difference," says Steve Johnson.
The Iowa State University Extension farm and ag business management specialist told a group of farmers attending soybean management field days in Tekamah recently that the soybean production level in the U.S. this season isn't that different from what it has been. Demand is driving the market higher right now.
But it may not last, Johnson says. Farmers in the U.S. expect to harvest 78 million acres of soybeans this season. If that figure holds up, it will be a record. Nebraska farmers are looking at 5.35 million acres of soybeans to harvest, up 12.4% from last year, making the state the nation's fifth largest soybean producer.
Lots of things can happen between now and harvest, but Johnson says the average national cash soybean price for the 2010-11 marketing year will come down to U.S. production, the global economy, outside markets like the U.S. dollar value index and crude oil, 2011 South American production and expectations for U.S. production next year.
There is no crystal ball, but Johnson believes soybean market prices are trending down into harvest time, and perhaps into next year. World drought news has buoyed wheat prices in the past few weeks. "Soybeans have come along for the ride," Johnson says.
"I would probably reward this market" with sales, he said. "The best basis is right now and it will only widen at harvest because there are lots of soybeans." Johnson said, "Ten dollar soybeans don't last very long because people produce more. Argentina and Brazil plant more."
Marketing should be a planned strategy. "Don't let ego drive your pricing," Johnson said. He suggested that farmers who haven't locked in November soybean futures prices or harvest basis yet should consider the history of seasonal futures price trends that trend down at harvest. They should also think about cash flow needs for the future, the cost of continued ownership of stored soybeans or commercial storage costs and local basis opportunities.
For more information, you can email Johnson at sdjohns@iastate.edu.