| OU 295 | February 12, 1996 |
Soybean prices have shown strength lately and March '96 futures prices for the recently harvested (1995) crop are currently at $7.41 ($/bu) at this writing. Also, futures prices for the 1996 crop are currently trading $7.17 on the November, 1996 contract. This is an attractive price given the U.S. crop in 1995 and the projected carry-in to 1996 supplies. The 1995 U.S. and Southeastern Soybean Crop: A Supply Side Recap U.S. Soybean production in 1995 is currently estimated at an enormous 2.15 billion bushels which is a 20 percent decrease from the record production in 1994 (Table 1). The called yield of 34.9 bushels per acre for 1995. It is 6.5 bushels per acre below the record set in 1994. 1995 carry-in stocks were an above average 335 million bushels. With 61.6 million acres harvested the '95 total supplies are at 2.492 billion bushels. In South Carolina, soybean acreage harvested was set at 530,000 acres. This was down 50,000 acres from the '94 crop and well below the 1989-93 average of 706,000. This general trend of lower acreage is attributed to soybean land being converted for the expansion of cotton acreage.
| Item | Units | Year | U.S. | So Carolina |
|---|---|---|---|---|
| Acres Harvested | Thous. Ac. | 1994-95 | 60,859 | 580 |
| 1995-96 | 61,624 | 530 | ||
| Yield | Bu/Ac | 1994-95 | 41.4 | 27 |
| 1995-96 | 34.9 | 24 | ||
| Production | Thous. Bu. | 1994-95 | 2,156,694 | 15,660 |
| 1995-96 | 2,151,834 | 12,720 | ||
| * U.S. information from USDA-ERS data; S.C. information from USDA-NASS and S.C. Agricultural Statistics Service | ||||
Export prospects for U.S. soybeans are extremely strong. Foreign crush margins are also wide at present. Exports will be strong, in part, because the U.S. is the primary exporter of whole beans globally. Exports are projected at 800 million bushels in 1995-96. This is well over the recent average export performance.
| Item/Mkt Year | Units | 91-92 | 92-93 | 93-94 | 94-95 | 95-96 | 96-97** |
|---|---|---|---|---|---|---|---|
| Acres Harv. | Mill Ac | 58 | 58.2 | 57.3 | 60.9 | 61.6 | 58 |
| Yield | Bu/Ac | 34.2 | 37.6 | 32.6 | 41.5 | 34.9 | 35 |
| Carry-In | Mill Bu | 329 | 278 | 292 | 209 | 335 | 190 |
| Production | Mill Bu | 1,987 | 2,188 | 1,869 | 2,517 | 2,152 | 2,030 |
| U.S. SUPPLY | Mill Bu | 2,319 | 2,468 | 2,167 | 2,731 | 2,492 | 2,220 |
| U. S. Use | Mill Bu | 1.357 | 1,406 | 1,369 | 1,405 | 1,390 | |
| Exports | Mill Bu | 684 | 770 | 589 | 838 | 800 | |
| UTILIZATION | Mill Bu | 2,041 | 2,176 | 1,958 | 2,396 | 2,301 | 2,000 |
| U.S. END STOCKS | Mill Bu | 278 | 292 | 209 | 335 | 190 | 220 |
| U.S. FARM PRICE | $/Bu | $5.58 | $5.56 | $6.41 | $5.35 | $7.05 | $6.75 |
| *US data from USDA estimate 1/16/96: Marketing Year 1995-96 estimates are projections for 9/1/95-8/31/96. | |||||||
| **Clemson projections | |||||||
With 1995 utilization projected at a large 2.3 billion bushels, ending stocks are projected at an tight 190 million bushels. This a 64 percent decrease over last year and provides a good start for the 1996 crop.
Should you sell any unsold '95 crop now or hold out for higher prices? Current prices reflect a market consensus that has accounted for this year's reduced production and high disappearance. There is a chance for a spring rally due to reports of adverse South American weather affecting their crop. There is also a chance for another May-June U.S. weather scare. It wouldn't take a dramatic weather scare to send prices higher given these stock levels.
Needless-to-say, with the tight stocks that we are currently projecting and market conditions as they are, there is potential for price pressures building. However, based on recent history, current prices don't appear to be bad ($7.00 plus) for some of the 1996 crop. It might be wise not to pass up this market opportunity for some (no more than one-forth) of next year's crop. Any unpriced crop would be priced later -- hopefully at higher levels.
1996 by Department of Agricultural
and Applied Economics, Clemson University.
