If the option exists, it's better to put soybeans in the bin
Contrary to what's been said and all the hype about corn this growing season, it appears as if the marketplace will pay more to farmers who store soybeans, according to a Purdue University expert.
Purdue Extension ag economist Chris Hurt projects soybean prices to be between $8.25 to $8.50 per bushel at harvest time and, given the right circumstances, pushing $10.
"Add a dollar a bushel during storage season, which will push prices into the $9-$9.50 range. And if there are growing problems in South America and export demand from China is stronger, we could see double digit soybean prices up in the $10 range," Hurt says in a university report.
Indiana and Ohio corn yields are up from the U.S. Department of Agriculture's August estimate, and when looking at the marketplace, Hurt projects corn prices around much of Indiana and Ohio to be in the $3 range.
"It does look like corn prices will increase throughout the storage season, probably 50 to 60 cents," Hurt says. "Both corn and soybeans will have returns for storage capacity, but the priority goes now to soybean storage for two reasons.
"First, soybeans have a stronger storage return than what corn does and secondly, from a speculative standpoint, soybeans appear to have more opportunity for upside gain than corn."
Indiana soybean yield estimates were dropped by four bushels per acre to 43 bushels, according to the USDA's September crop report. "That's about five bushels under trend, and that was a disappointing surprise for us here in Indiana," Hurt says. "Late-season diseases were a problem for soybeans, as well as the lack of rain in southern parts of the state."
In Ohio, the report shows no change in soybean yields, remaining at 44 bushels per acre. "Again, that's about two to three bushels under trend yield for Ohio," Hurt says. "We worried a great deal about the droughty conditions this summer here in the Eastern Corn Belt."
Nationally, soybeans changed slightly, dropping one-tenth of a bushel to 41.4 bushels, while corn yield increased three bushels per acre on average. Corn yields for Indiana were up three bushels to 160 bushels per acre on average, and Ohio corn yields were up seven bushels to 150 bushels per acre from USDA's August crop report.
"Indiana has a slightly better than average corn crop, while Ohio suffered through severe drought conditions in portions of their major growing areas and they are probably two to four bushels under their state average," Hurt says. "Overall, Indiana came out with a slightly above normal corn crop, but the soybean crop got nicked at the end. Ohio conditions were such that both corn and soybeans were below trend yields, but not as substantially as originally thought."
One question that many have pondered over the growing season has been answered from this report. "There's going to be plenty of corn to meet the needs," Hurt says. "In fact, looking back, we have shifted a little too much land over to corn, but this is the nature of the market.