Prices for US soybean and corn below production costs

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Publish time: 31st August, 2015      Source: www.cnchemicals.com
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August 31, 2015

   

   

Prices for US soybean and corn below production costs

   

   

   

A burgeoning global supply of soybean, coupled with near-record output in the States, could push down prices for US new-crop soybean and corn to as much as US$1 to US$2 per bushel, Reuters reported.

   

   

The price range situates below production costs and might spur farmers to raise yield further in order to meet costs. These would in turn prolong the current lows of benchmark US futures, officials said.

   

   

For Chicago new-crop soybeanfutures, a drop below US$8 per bushel is expected. Corn could drop to US$3 per bushel. Worryingly, a bushel of soybeans costs US$8 to US$9 to be produced, with corn at US$4 to US$5.

   

   

With 97% of US farms being family businesses, farmers could only afford to increase production, said Jim Call, a former chairman of United Soybean Board.

   

   

"Futures are under pressure but we are also seeing the basis falling," he added, noting cash prices for new-crop beans in some areas that are 65 cents below Chicago futures contract for November.

   

   

With better US production anticipated due to recent rains, as well as higher supplies in South America, soybean futures sunk to their lowest since 2009, at US$8.55 this month. Corn trades at US$3.76 per bushel, 30 cents above its lowest record since October.

   

   

"We had a record harvest last year and looking at near-record production this year which is after two years of all-time high production in South America," said John Baize, the president of John C. Baize & Associates.

   

   

Meanwhile, the USDA forecasted corn output to reach 13.686 billion bushels, with average yield at 168.8 bushels per acre.

   

   

For soybean harvest in 2015-16, this was pegged at 3.916 billion bushels based on an average yield of 46.9 bushels per acre.