Grains, Soybeans: Opposing Forces: U.S. Soybean Production Suffered in the August Heat While Demand Has Remained Strong, Meaning Another Year of Price Rationing. but Watch out for South America. Grains, Meanwhile, Aren't Giving Bulls Much Inspiration

By Jobman, Darrell | Futures (Cedar Falls, IA), November 2003 | Go to article overview

Grains, Soybeans: Opposing Forces: U.S. Soybean Production Suffered in the August Heat While Demand Has Remained Strong, Meaning Another Year of Price Rationing. but Watch out for South America. Grains, Meanwhile, Aren't Giving Bulls Much Inspiration


Jobman, Darrell, Futures (Cedar Falls, IA)


What looked like a banner year for U.S. crop production in mid-summer turned into not exactly a bust but well below the optimistic expectations for the first soybean crop of more than 3 billion bushels.

Perhaps nothing summarizes the 2003 season better than the Pro Farmer Crop Condition Index charts, which portray how a hot and dry August changed the season around over a wide area of the Midwest, especially for soybeans (see "Taking a dive," right). At the time when crops normally are "made" going into harvest and traders typically begin to focus on demand for the new season, the market was still paying much of its attention in October to the size of the crops it has to deal with this year.

[GRAPHIC OMITTED]

Weather was favorable until corn got through its key pollination period in July and set records for yield and production, but soybean prospects shriveled in the August heat. Many growers were disappointed to see yields decimated by fewer beans per pod, small bean size and the effects of heavy damage by sap-sucking aphids. As a result, supply/demand estimates have shifted from a year for rebuilding stocks to projections for another tight carryover, and traders have seen the highest prices in years.

REALIZATION SINKS IN

For soybeans, this has been a "realizing" year for prices. First, total output in 2002 was good but not excellent as a bumper crop in Iowa was offset by poor yields in the eastern Corn Belt as demand stayed strong. Traders expected that export shipments from the United States would diminish when Brazil's harvest began in March/April. When they realized U.S. exports were holding up and would easily surpass season estimates, even after Brazil's huge soybean crop became available, prices moved above the $6 per bushel level in April to the highest point since 1998.

Second, after getting a late start with a cool, wet spring, the 2003 crop benefited from good weather that had everyone thinking about a big crop in June/July and prices slipped toward $5 a bushel. Then came August. When traders began to realize that the lack of rain, 100-degree heat and aphids were taking a toll on pod setting and filling, soybean prices began to rise again, reaching $7 a bushel in early October at a time when harvest usually is putting pressure on prices. In fact, as crop condition and yield reports came in, soybeans exhibited the type of volatility usually associated with a weather market in July or August.

The bullish case did get one setback from production, but it had nothing to do with the 2003 crop. In its quarterly stocks report on Sept. 30, the U.S. Department of Agriculture (USDA) revised the size of the 2002 crop from 2,730 million bushels to 2,751 million bushels, boosting the carryover estimate from 140 million bushels to 169 million bushels. Traders expected less usage due to a dwindling supply but were surprised by the size of a production adjustment months after the USDA should have had a good handle on the 2002 crop.

That turned out to be a minor bump in the road, however, when the USDA released its October crop estimates showing soybean yields averaged only 34 bushels per acre and production was only 2,468 million bushels, the smallest crop since 1996 when prices reached $9. Even before the October report made it "official" by reducing carryover estimates to 130 million bushels, the U.S. soybean situation looked very tight for 2003/04, according to Jerry Gidel, grains analyst for North America Risk Management Services Inc. in Chicago. He sees ending stocks dropping to 115 million bushels and the stocks/use ratio falling below the levels of 1996/97 and even those of the mid-1970s (see "Where are the beans?" above).

[GRAPHIC OMITTED]

But that doesn't mean soybean prices will hit $9 again or that traders will see "beans in the teens." Aside from the market still trying to assess the size of the 2003 crop, other fundamental factors are the key to the soybean situation:

* Usage. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Grains, Soybeans: Opposing Forces: U.S. Soybean Production Suffered in the August Heat While Demand Has Remained Strong, Meaning Another Year of Price Rationing. but Watch out for South America. Grains, Meanwhile, Aren't Giving Bulls Much Inspiration
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.