Farmers holding onto soybeans
07.31.2010
By Tim Hoskins, Iowa Farmer Today
Farmers continue to hold soybeans and that has the soybean processing industry asking questions.
Karl Setzer, certified trading advisor with MaxYield Cooperative based in West Bend, says soybean processors have been increasing the basis to try to lure old-crop soybeans out of the bin.
However, he says the basis improvement is offset by declines in the futures prices to lead to a flat cash price.
In some cases, soybean processors have been turning to commercial elevators to supply their needs. Setzer said the soybean inventory at processors was at 62 million bushels, a two week supply. That was also 20 million bu. lower than one year ago.
Setzer says there is some talk among grain buyers some farmers are down to their “gambling” bushels and holding onto their old-crop soybeans until the new crop is made or the price increases to draw them out.
However, the lack of farmer selling also has some traders questioning if the farmers have as many soybeans stored as the USDA is estimating. That has led to questions about soybean production in 2009 and the accuracy of the USDA reports. That could affect the carryout numbers for the current marketing year ending Aug. 31.
The USDA is estimating carryout from the 2009-10 marketing year would be 185 million bu. However, carryout from the new crop is estimated at 360 million bu.
He says traders will worry if the carryout estimate is around the 200 million-bu. mark.
However, he says the wet weather and continued China purchasing has put some support in the market.
On the other hand, he reminds farmers their South American counterparts will be marketing 1.2 billion bu. more than last year.
On the corn side, Setzer says the weather has been a bearish factor as many traders still follow the “rain-makes-grain” mentality.
While the Southeast United States, Southern Iowa and Northern Missouri have had problems, he says the early planting and non-stressful growing conditions have some traders expecting a large crop this fall.
Currently, the USDA is using a national yield of 163.5 bu./acre. He says most private traders are expecting a national yield of 167-173 bu./acre with some estimates up to 177 bu./acre.
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