Producer price luck may be running out when it comes to soybeans.
The likelihood of a monster 2022-23 soybean crop out of South America - and the potential for US producers to ramp up soy acres in the spring – suggests producers will need to think very carefully about their new-crop soybean marketing plan, said Kell Grain merchandiser Steve Kell.
After all, Kell said, it was the drought-reduced crop in Brazil in 2021-22 and a less than spectacular US crop this past year that helped lift southern Ontario old-crop soybean prices to their current level at more than C$19/bu. If South American output rebounds this year and the US harvests a bigger crop as well, those kinds of prices are unlikely to be repeated, he said, meaning producers may want to take note of current new-crop prices in the province which are now hovering at above $17.
“We’ve had great luck in soybeans the last couple of years, because Brazil had a bad crop last year because of a drought, and North America had an unspectacular crop because of a drought (in 2022). You had two small production years, back-to-back,” Kell said as part of a presentation he gave at the Ontario Agricultural Conference earlier this month.
“The question we want to ask ourselves as marketers, producers, and sellers of soybeans is what happens if we follow up (the two smaller crops) with two big crops in a row? Does my marketing plan take into consideration what that looks like?”
Kell didn’t offer a new-crop soybean price outlook in the event of good crops out of South America and the US, but said the outlook obviously becomes more bullish if American farmers cut back on acreage this spring. However, he said the high cost of nitrogen fertilizer for corn may be one of the factors that pushes US soybean area above the 87.5 million acres planted in 2022.
“I think there’s a possibility, legitimately, we’re looking at more soybeans getting planted this spring,” he said.
Chicago soybean futures closed lower for the fourth straight day on Monday, pressured by beneficial weekend rains in central Argentina growing areas, and forecasts for more moisture later this week. If conditions in drought-plagued Argentina stabilize – and current production estimates do not decline further – and Brazil comes through with a big crop, total South American soy production for 2022-23 could amount to 178.5 million tonnes, up about 5 million from a year earlier.