katrina
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Soybeans Trade In Teens, Set New Highs
July 2008 soybean futures reached a record $13.06/bu. high trade on the Chicago Board of Trade (CBOT) electronic platform on Tuesday, Jan. 8, before settling at $12.95/bu. The previous soybean futures high price occurred last week on Jan. 4, when July futures traded electronically at $13.01 1/2, before settling at $12.88.
"We're definitely seeing stronger grain prices being carried forward in preparation for the upcoming U.S. planting season as bidding for row-crop acres intensifies," says Chad Hart, Iowa State University agricultural economist. "Looking forward to this spring, it's definitely going to be a horse race between corn and soybeans for more production acres."
In comparison, July 2008 corn futures traded to a high of $5.01/bu. electronically on Tuesday's CBOT, before settling at $4.99 1/2. Tuesday's closing price for July 2008 corn futures is only 55 cents shy of the all-time high July 1996 corn futures price of $5.54 1/2.
However, the current price ratio between corn and soybeans favors neither crop in efforts to attract more acres, notes Hart. "Normally, we look for a 2 1/4 price ratio, which is where it's stood historically," says Hart. "So, from a price ratio standpoint, it's about 2 1/2, which makes this a very competitive horse race."
Corn will likely hold onto some acreage that it gained last year in the U.S., but soybeans will also gain back some acres in 2008 that it had in 2006, predicts Hart. "I doubt we'll see either the corn acreage that we had in 2007 or the soybean acres we had in 2006," he says. "It will likely be somewhere in between."
USDA will release its annual crop-production report on Friday, which may cause some adjustments in market prices, says Hart. Yet, "a bigger market mover than Friday's USDA report is what's going on in South America right now," he adds. "With global grain supplies so tight and the competition for row-crop acreage so strong, we're much more susceptible to weather rallies right now than we were last year."
The weather's impact on South American corn and soybean production could provide "extraordinary upside potential" to grain markets this year, agrees Brad Anderson, senior vice president, Informa Economics, Inc. "While Brazil's production prospects look pretty good right now, Argentina is on the dry side," he reports. "There's really not much room for error if production problems do develop in South America."
Corn and soybean prices could both continue to climb higher in the weeks ahead, "depending on weather events in South America," says Hart. However, prices could also drop if South American grain production appears likely to meet or exceed expectations. After the South American harvest wraps up, the next big factor in determining grain market prices for 2008 will be what the USDA's planted acreage report turns out to be for the U.S. this spring, he adds.
Farmers who still have unsold grain will have to determine whether they want to take what the market is offering now or wait and take a chance on seeing more record-high grain prices later this season. "Some days it's just hard to beat a record price," sums up Hart.
July 2008 soybean futures reached a record $13.06/bu. high trade on the Chicago Board of Trade (CBOT) electronic platform on Tuesday, Jan. 8, before settling at $12.95/bu. The previous soybean futures high price occurred last week on Jan. 4, when July futures traded electronically at $13.01 1/2, before settling at $12.88.
"We're definitely seeing stronger grain prices being carried forward in preparation for the upcoming U.S. planting season as bidding for row-crop acres intensifies," says Chad Hart, Iowa State University agricultural economist. "Looking forward to this spring, it's definitely going to be a horse race between corn and soybeans for more production acres."
In comparison, July 2008 corn futures traded to a high of $5.01/bu. electronically on Tuesday's CBOT, before settling at $4.99 1/2. Tuesday's closing price for July 2008 corn futures is only 55 cents shy of the all-time high July 1996 corn futures price of $5.54 1/2.
However, the current price ratio between corn and soybeans favors neither crop in efforts to attract more acres, notes Hart. "Normally, we look for a 2 1/4 price ratio, which is where it's stood historically," says Hart. "So, from a price ratio standpoint, it's about 2 1/2, which makes this a very competitive horse race."
Corn will likely hold onto some acreage that it gained last year in the U.S., but soybeans will also gain back some acres in 2008 that it had in 2006, predicts Hart. "I doubt we'll see either the corn acreage that we had in 2007 or the soybean acres we had in 2006," he says. "It will likely be somewhere in between."
USDA will release its annual crop-production report on Friday, which may cause some adjustments in market prices, says Hart. Yet, "a bigger market mover than Friday's USDA report is what's going on in South America right now," he adds. "With global grain supplies so tight and the competition for row-crop acreage so strong, we're much more susceptible to weather rallies right now than we were last year."
The weather's impact on South American corn and soybean production could provide "extraordinary upside potential" to grain markets this year, agrees Brad Anderson, senior vice president, Informa Economics, Inc. "While Brazil's production prospects look pretty good right now, Argentina is on the dry side," he reports. "There's really not much room for error if production problems do develop in South America."
Corn and soybean prices could both continue to climb higher in the weeks ahead, "depending on weather events in South America," says Hart. However, prices could also drop if South American grain production appears likely to meet or exceed expectations. After the South American harvest wraps up, the next big factor in determining grain market prices for 2008 will be what the USDA's planted acreage report turns out to be for the U.S. this spring, he adds.
Farmers who still have unsold grain will have to determine whether they want to take what the market is offering now or wait and take a chance on seeing more record-high grain prices later this season. "Some days it's just hard to beat a record price," sums up Hart.