Experts: soybean production, yields up; market prices expected to lag

BY BROOKS TAYLOR

Mt. Pleasant News

Iowa State University Extension Economist Charles Brown said what all soybean producers already know ? market prices are lagging behind input costs and things are not expected to improve over the short term.

?I think farmers were hoping for $10 (per bushel soybean prices), but right now prices are in the low $9s, which is below the input cost,? sized-up Brown.

He said the production cost of an acre of soybeans is $10.90 per bushel.

Several factors have lead to the lean market, but the main culprit, Brown said, is the age-old supply-and-demand cycle.

?We have increased soybean acres planted this year, and although demand has held very well, we just have too large a supply,? he explained.

The economist pointed out that nationally, the amount of planted soybean acres has grown in the U.S. from 83.1 to 83.5 million.

Although planted acres and yields are up, export demands are down. One of the reasons for the decline in exports is that the nation?s two largest export markets ? China and Japan ? have reduced their exports. The United States Department of Agriculture (USDA) predicts exports will decrease from last year by 50 million bushels.

The latest report from the USDA lists the nation?s ending-stock production at 470 million bushels this year, which is an increase of 45 million bushels from the July report. Price projections are anywhere from $8.40 to $9.90 per bushel.

?Prices are trending down,? Brown observed. ?We have lost $1-$1.50 per bushel in the last 45 days. I think prices will continue to trend downward through harvest but then level off after harvest.?

Also, the 2015-16 crop year production of 470 million bushels compares with 240 million bushels during the 2014-15 crop year and 92 million bushels in 2013-14.

?Basically, we have more acres being planted, better yields and good growing conditions,? Brown noted.

Brown said the increase in soybean acres this crop year is largely due to the high input costs of planting corn.

One other factor affecting markets is soybean production in South America ?which was pretty good this year,? Brown said.

?We used to look at the U.S. market when determining future soybean prices, but now you have to look at the world economy,? he remarked.

Another factor, which will heavily influence the soybean market, is the production of biodiesel and ethanol, both of which Brown sees decreasing. ?It?s hard to compete with cheap oil,? the economist said.

As for production this year in Iowa, Brown sees a strong yield. ?The bottom two tiers of counties are not as good as last year, but from Highway 34 northward, the crops are looking good. I think the total bushels produced in Iowa may exceed last year, but not the bushel average per acre.?

Virgil Schmitt, an Iowa State University Extension regional agronomist, agrees with Brown?s assessment.

?In general, the crops look very good,? Schmitt said. ?I don?t know if they are better than last year. People who were able to plant in a timely fashion may have better yields while late planting will set back yields. I don?t know if we will surpass last year?s bushel average but we will be close.?

Southeast Iowa led the state in yields last year, but Schmitt said that honor may go the north-central part of the state this year. ?Last year, southeast Iowa yields blew the socks off everybody, but that is not the case this year. I think east-central Iowa and southeast Iowa will fight it out for second,? he forecasted.

Schmitt said he knows more soybeans were planted this year as some farmers who were doing corn-soybean rotations moved the emphasis more to soybeans.

The agronomist did note that some sudden-death syndrome is occurring in Henry County. Sudden-death syndrome (SDS) is a root-rot infection. ?That usually starts about 72 hours after the beans are planted and occur when the soil is wet when the beans are planted. However, typically you don?t see the effects of it (SDS) until August.

?The earlier in the season it happens, the more devastating it is,? Schmitt continued. ?Some fields will have substantial yield loss because of it.?

SDS, Schmitt said, also has been spotted in Lee and Des Moines counties.

At this juncture in the growing season, the soybean crop more or less is made, he said. ?If the seed fills the pod, it still can be green, but the yield is pretty much made at this point.?

Schmitt said Iowa has been blessed with favorable weather during the growing season and agrees with Brown that although the average yield may be down from last year, the number of soybeans produced in Iowa will show an increase.

?We?ve had adequate to sometimes too adequate rainfall, which has made for a good growing season,? Schmitt said. ?In general, the pods are filling out well. I think people are going to be really happy with the yields.?

Producers may be happy with the yields but not the prices, Brown contended. As he looks into the future, he doesn?t see the market improving substantially. ?We have to eat through the supply first and that might take a year or two.?