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Soybean Market Situation And Outlook

Soybean Market Situation And Outlook. 2008 Southern Ag. Outlook Conference. Atlanta, Georgia. September 24, 2008. Kurt M. Guidry. Professor. Department of Agricultural Economics. Current Issues. Despite Increased Production, Stocks Expected To Remain Tight.

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Soybean Market Situation And Outlook

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  1. Soybean Market Situation And Outlook 2008 Southern Ag. Outlook Conference Atlanta, Georgia September 24, 2008 Kurt M. Guidry Professor Department of Agricultural Economics

  2. Current Issues • Despite Increased Production, Stocks Expected To Remain Tight • Weaker US Dollar Has Supported Export Demand Despite Higher Prices • While Lower, World Stocks Still At Comfortable Levels • Speculative (Non-Commercial ) Activity Continue To Help Shape Market • Historically High Prices Persist (Basis Levels Remain Weak) • Prices Remain Volatile, Downward to Sideways Trend To Harvest • Longer Term Prices Likely Shaped By Crop Acreage

  3. Fundamental Supply and Demand Conditions

  4. Source: USDA, World Agricultural Supply and Demand Estimates, September 2008

  5. Stock Situation Remains Positive And Points To Continued Strong Prices

  6. Despite Increased Production in 2008, Solid Export Demand Due To Weaker Dollar and Strong Domestic Crush Expected to Keep Stocks Tight

  7. U.S. Currency Exchange Rate – Selected Countries Brazil Japan Have We Seen the End to Falling Dollar ? Mexico China Source: St. Louis Federal Reserve

  8. 08/09 Exports Down 32% From 07/08 Source: USDA, Foreign Agricultural Service

  9. Sharp Increases in Biodiesel Production Providing Support For Soybean Oil Source: National Biodiesel Board: http://www.biodiesel.org

  10. Source: USDA, Economic Research Service

  11. World Supply and Demand • Increases in US and South America Production Expected to Bring Increases In World Stocks • While Stocks Are Down From High Two Years Ago, Still Above Long Term Average • While Prices Remain Strong, Fundamentally, World Supply and Demand Situation Still Comfortable

  12. Source: USDA, Foreign Agricultural Service

  13. Source: USDA, Foreign Agricultural Service

  14. Source: USDA, Foreign Agricultural Service

  15. China’s Activity In Soybean Market Is Large Factor In US Export Performance

  16. Source: USDA, Foreign Agricultural Service

  17. Short Term Price Movement Likely Determined By Progression of Crop to Harvest (And Speculative Activity)

  18. Source: DTN AgDayta

  19. Source: DTN AgDayta

  20. Without Weather Concerns, Expect Sideways To Downward Trending Market To Harvest Speculative Activity And Spillover Influences From Outside Markets Could Alter Trend

  21. 2002-07 Avg Source: USDA, National Agricultural Statistics Service

  22. Source: USDA, Agricultural Marketing Service

  23. Source: USDA, Agricultural Marketing Service

  24. Soybean Futures Contract Prices – September 22, 2008 Source: DTN AgDayta

  25. Soybean Futures Prices – Long Term Trend Source: DTN AgDayta

  26. Soybean Futures Prices – Seasonal Index Source: DTN AgDayta

  27. Soybean Futures Contracts – Commitment of Traders Reduction in Speculative Position Has Helped Soften Market – Is A Reversal In This Trend Going To Happen As A Result Of Outside Market Influence? Source: DTN AgDayta

  28. Basis Levels Remain Historically Weak: Departure of Futures From Fundamentals And Increased Transportation Costs

  29. Source: USDA, Agricultural Marketing Service

  30. Longer Price Trend: Will We See Another Battle For 2009 Acres? Tight Stock Situation For Both Corn And Soybeans Suggest Both Markets Will Look To Attract Additional Acres in 2009

  31. Current Futures : Dec 09 Corn @ $5.96, Nov 09 Soybean @ $11.95

  32. At Current Prices For 2009, Would Seem To Favor Corn At Average Yields Will Soybean Prices Have To Increase Relative To Corn Prices To Maintain Acres ?

  33. Summary • Historically Strong Prices • Fundamentally, Would Expect Prices To Trend Slightly Down or Sideways Into Harvest and Then Improve As Battle For 2009 Acres Begin • Tight Stocks Will Keep Market Volatile • Increased Volatility = Increased Marketing Costs and Perhaps Limited Marketing Alternatives • Fundamentally, World Stocks Still Comfortable – Will That Limit Upside Potential ?

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