Analysts Expect More Soybeans in 2018, Economist Warns Against It
November 07, 2017
November 07, 2017 by Sonja Begemann
Next year analyst expect anywhere from 86 to 90.5 million soybean acres, following this year’s record high of 88.7 million acres. However, more acres could mean more price uncertainty, especially if yields are high this year and next year.
“The large 2017 soybean production totals and the continued buildup of soybean stocks point toward a 2017-2018 marketing year price in the low to mid $9.00 range,” says Todd Hubs with the Department of Agricultural and Consumer Economics at the University of Illinois. “A continuation of above-trend soybean yields in 2018 would diminish the need for current acreage projections.”
“Soybean acreage may need to decline in 2018 to generate a 2018-2019 marketing year average farm price in the mid-$9.00 range to cover cost of production,” he continues.
When you compare projected 2017 ending stocks to demand the U.S. is still at a surplus and greater acres with high yields will only soften the market. However, the markets aren’t asking for more corn or wheat as an alternative to soybeans, which leaves farmers with a tough decision in 2018.
“I could see us getting in the low $9.00 to high $8.00 range because of this acreage number, but we saw similar drop a couple years ago and it rebounded,” says Ryan Bristle, farmer and marketing consultant in Boone County, Iowa. “I could see it initially in the spring time and then from there it’s a weather and production market.”
Bristle says there will be opportunity for prices to rebound throughout the year—even with the potential for higher acres. Weather, South American production and other unknowns will impact market price.
Hubs recommends that farmers to monitor soybean exports and demand before making 2018 planting decisions.
“At this point, it seems that soybean acreage may not decline sufficiently in 2018 to generate 2018-2019 markting year average price in the mid-$9.00 range,” Hubs says. “Careful monitoring of the pace of soybean exports and crush in the 2017-2018 marketing year, and the development of the South American crop can provide information on the evolving conditions of the soybean market in 2018.”
Watch for USDA’s release of Winter Wheat Seedings report for the first indication of farmer acreage decisions in early January.