ISA Iowa Soybean Association : USDA crop report yields reason for optimism in soybean market

Ankeny, Iowa - At a time when Iowa soybean farmers needed good news, today's U.S. Department of Agriculture (USDA) reports delivered.

With soybean prices languishing at unprofitable levels for many producers, markets initially shot up after the government released final 2015 crop production numbers and supply and demand estimates. Iowa Soybean Association (ISA) leaders say the mostly favorable numbers were a much-needed financial and psychological boost.

'Hopefully we have found our winter low in this market and we can establish some upward momentum to provide producers an opportunity to profitably market their soybeans,' said ISA President Wayne Fredericks of Osage.

U.S. soybean production is pegged at a record 3.93 billion bushels, down 51 million from December estimates, according to the annual Crop Production Summary. The harvest area decreased slightly to 81.8 million acres and the average yield was scaled back by .3 bushels to a record 48 bushels per acre.

The USDA lowered soybean ending stocks by 25 million bushels to 440 million due to lower production coupled with strong domestic demand. The U.S. crush is estimated at 1.89 billion bushels for the 2015/16 marketing year, unchanged from last month but slightly higher than the previous year, according the World Agricultural Supply and Demand Estimates Report.

ISA Market Development Director Grant Kimberley said domestic demand for soybeans and soybean products, especially oil by the biodiesel industry, will help whittle down record supplies.

'Markets don't move in one direction for very long, and it has been down since late summer,' Kimberley said. 'Reports like this can put a bottom on prices. The report is positive in the sense that it can serve to change the mentality in the market.'

Iowa soybean farmers produced a record 553.7 million bushels on 9.85 million acres, blowing the previous record away by more than 28 million bushels, according to the crop production report. The state once again became the No. 1 soybean producer, outpacing Illinois by more than 9 million bushels. Farmers averaged a record 56.5 bushels per acre, 4 more than the previous all-time high.

The USDA projects the season-average soybean price at $8.05 to $9.55 per bushel for the 2015/16 marketing year, down 10 cents at the midpoint based on prices reported to date.

Oilseed analyst John Baize expects prices to linger in the middle to lower half of the range unless a supply issue occurs, like too much rain in South America that damages plants or reduces yields or significant planting delays in the U.S.

'The reports are slightly positive, but I don't see a lot to cause prices to substantially go up given large supplies in South America, a strong dollar and weak currency in Brazil and Argentina,' Baize said.

Fredericks said exports are vital to reduce supplies and increase prices. ISA officials met with soybean meal buyers in the Philippines in December and will soon travel to other countries in Asia.

'The point still remains that we have large stocks of soybeans to market, which puts added importance on our trade missions to Thailand and China this spring,' Fredericks said. 'Building relationships and continued growth in those markets will be one of the keys to returning some profitability to this market for the long haul.'
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The Iowa Soybean Association (www.iasoybeans.com) develops policies and programs that help Iowa's more than 40,000 soybean farmers expand profit opportunities while promoting environmentally sensitive production using the soybean checkoff and other resources. The association was founded in 1964 and is governed by an elected volunteer board of 21 farmers. It strives to be honest and transparent, fact-based and data driven and committed to environmental stewardship, collaborations and partnerships.

Funded by the soybean checkoff