January 7, 2014
US soy prices remain strong despite foreign pressure
Despite good weather patterns in Argentine soy growing areas, new crop futures prices have been pulled down, however, old-crop soy remains strong thanks to good export sales.
Chris Hurt, Purdue University Extension economist sees good marketing opportunities for remaining 2013 soy. And he tells Corn+Soy Digest farmers should be ready for 2014 crop sales if November futures rally to US$429.39 per tonne.
November beans were trading in the US$414.71 range, still hurt by good South American growing conditions. "Soy prices have been under downward pressure as a result of reduced weather threats to production in Argentina," Hurt says. "Old-crop prices, however, should be supported by the continued rapid pace of export sales and shipments."
Hurt says the January 10 USDA crop reports will likely be an important signal in determining the direction of prices. "Those reports are expected to show higher 2013 US production that will be offset by an increase in US exports," he says.
"January soy futures have support at US$458.75 per tonne, with strong resistance at US$495.45. Producers should consider making additional sales near the highs. Inverted cash bids into the spring and summer will encourage farmers to market aggressively this winter."
Hurt notes that South American soy yields will likely be determined in late January and February. So the winter price direction will be influenced by the weather over the next eight weeks. That direction can be upward, but would probably involve some shift in South American weather toward more damaging conditions.
He believes the market will also focus on increased US soy acres. "Current crop budgets for 2014 strongly favour soy over corn with expected shifts of three to four million more soy acres" Hurt says.
If the South American crop is favourable, increased US acreage will result in growing inventories, Hurt added. He encourages farmers to take extra steps to reduce input costs and work to price soy at levels that cover expected costs.