NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

September 24, 1998

The Market Advisor: Soybean Price Outlook

George Flaskerud, Extension Crops Economist
NDSU Extension Service

What a difference a year makes. November soybean futures were $6.35 a year ago, compared to $5.28 on Sept. 22. Have we hit bottom? Probably not.

A large U.S. soybean crop will likely keep pressure on prices through much of harvest. November futures may test the contract low of $5.08 and possibly go lower. Cash prices may deteriorate more than the futures price, depending on how much of the crop moves directly from the combine to the elevator. The loan deficiency payment should be the greatest during the latter part of harvest.

A record crop of 2.9 billion bushels was projected by USDA in its September Supply and Demand Report. The projection was 84 million bushels larger than the August estimate. To make matters worse, the trade generally expects crop size to increase again in October.

Increases in domestic crush and exports are also expected, but not enough to offset the increase in production. As a result, ending stocks are expected to increase from 200 million bushels for the marketing year recently completed to 485 million bushels on Sept. 1, 1999.

One bright spot is the South American crop. Combined, Brazil and Argentina production is expected to be about 10 percent smaller than a year ago. One can only hope that low yields will reduce the projection further and open the door for additional U.S. exports and better prices.

The seasonal soybean price is expected to average somewhere between $4.65 to $5.35 per bushel, versus $6.45 for the past year. Soybean oil prices are projected to average $25.00 to $27.00 per hundredweight, about the same as for the past year.

Strong demand for soybean oil, sunflower oil and canola oil is expected. The supply of palm oil is expected to be very tight in the months ahead according to the Sept. 11 issue of "Oil World." Substantial increases in vegetable oil prices could be expected if it weren't for the large supplies of soybeans, sunflowers and canola, which will temper price increases.

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Source: George Flaskerud (701) 231-7377

Editor: Tom Jirik (701) 231-9629