URBANA, Ill. — Farmers around the nation are expected to plant more soybeans than usual this spring. There are many reasons this might be the case, but only one price outcome if things on the planet remain the same. Todd Gleason has more from the University of Illinois.
Supply and demand drive price. It is a simple concept, and one farmers deal with every day. However, trying to forecast supply and demand is much harder. Todd Hubbs from the University of Illinois starts each season by considering where price might go if supply and demand remain as expected. He’s posted his 2017/18 marketing year soybean forecast to the farmdocdaily website. The agricultural economist says there are three things he sees.
Hubbs: Increased acreage. Increased ending stocks. Lower prices. Now, just how much lower is the question. Because we still have the whole growing season ahead of us this is very high-level speculation. I’m putting the average farm price for soybeans in 2017/18 from $8.90 to $9.10 based on those numbers.
Having said that, Todd Hubbs believes two things could mitigate the price decline. A bad crop year in the United States is one of them, better than expected soybean exports from now until fall is the other. He thinks USDA’s 2.05 billion bushel soybean export figure for this marketing year is right and, if it is, he says the ending stocks should be 420 million bushels.
Hubbs: We’ve seen strong exports. It would be nice if the ending stocks number would come down, but I believe there is good reason to have caution now. This is based on what’s happening in Brazil. If we see U.S. exports exceed 2.05 billion bushels we will see a smaller ending stocks number for the 16/17 marketing year. It would be nice for prices. I think it will be one of the keys to price moving forward, but right now I’m sticking with that four-twenty.
And if that number doesn’t move, and the U.S. has a good soybean crop well says Hubbs.
Hubbs: That’s it. I don’t see any other way out of this scenario, and that’s the most likely scenario. So, that’s where I’m bringing it in at.
Bringing it in with a lower price that should, in theory, stimulate greater consumption.
— Todd Hubbs, Agricultural Economist – University of Illinois and Todd E. Gleason, Farm Broadcaster
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