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Soybeans shine in harvest 2011

11/17/2011 @ 10:56am

Dust in your teeth or mud under your fingernails? This fall's corn and soybean harvests left most farmers with one or the other. Late summer and fall saw moisture extremes in about every field in the country.

Eastern parts of the Corn Belt had a wet harvest season; farmers elsewhere faced major dryness and drought conditions that meant a quick harvest, which trimmed a lot of corn yields. Soybeans, on the other hand, ended up a lot better.

Kelley Kokemiller was pleasantly surprised by his soybean yields in Boone County, Iowa. Though he didn't quite “crack the 70-bushel barrier,” his yields averaged 52 to 69 bushels per acre. “It's been our best year for beans on average,” he says. “It's amazing how timely rains are so important. We had a 4-inch rain event in August, and that just made the beans. That will tell the story.”

“I've heard a 7 in front of some bean yields,” says Rod Klingenberg, grain merchandiser for Sands of Iowa Ag Services in Marcus, Iowa.

Bean yields weren't on the high end everywhere, though.

The dry late-summer weather likely trimmed 10 to 15 bushels off Allen Sobieski's yields in northwestern Iowa.

“Moisture was a little high yet at 13.5% and yielded 46 bushels per acre over the scale. It's a little disappointing. This 10 acres two years ago in soybeans yielded in the low 60s,” Sobieski says of one field he harvested earlier this fall. “Precipitation for August totaled 0.35 inches in four rain events.”

Falling below trend

For corn, it was simply either too dry or too wet – mostly the former – to reach trend yield levels in much of the country. Though he and his family were able to start running the combine in late August this summer after a mostly quick, painless planting season this spring, Doug Martin says his yields, though ranging widely, were still well below average.

“Sixty to 225 [bushels per acre] is what the yield monitor has hit, with most field averages coming in 50 to 75 bushels per acre below our five-year average,” says Martin, who farms near Mount Pulaski, Illinois. “Corn yields still held up pretty decent. The overall yield will be better than we thought but still way below the five-year average.”

The biggest yield drag for Martin came in his continuous cornfields. He says corn following soybeans yielded 30 to 50 bushels per acre more than corn on corn.

“I think this is mainly due to some of the heavy rains we had this spring causing us to lose some of our nitrogen,” he says.

And that yield drag meant some considerable profit losses. University of Illinois ag economist Gary Schnitkey says continuous corn yielded, on average, 27 bushels per acre less than corn after soybeans. Taking into account this fall's grain market prices and input costs, Schnitkey estimates continuous corn would need to yield 138 bushels per acre vs. a 165-bushel average for rotational corn to net the same profit.

Government numbers

Despite lower corn yields coming out of the field during much of this fall's harvest, that didn't do a lot to move prices as high as many thought.

That's because in its mid-October Crop Production and World Agricultural Supply/Demand Estimates reports, the federal agency showed slack on the demand side of the balance sheet. So even though supplies appeared smaller, so did demand, leaving the pressure on prices essentially unchanged in the immediate wake of the USDA numbers.

Tightened soybean ending stocks did shine a spotlight on South American weather leading up to harvest there, which will come in the January-February time frame.

Though demand was pegged slightly lower for beans, mainly through reduced exports, there's not much room for error moving ahead, says U.S. commodities grain market analyst Don Roose.

“What this says is, while our supplies are a little bigger on corn and wheat, we can't have many problems around the world,” Roose says. “We're going to watch the weather closer in South America. This means ending stocks on soybeans are going to remain fairly tight.”

Market plays

There's still room for a solid marketing play, says Cargill senior grain merchandiser Ray Jenkins. So if you need to lock in some profits, that's likely still in the cards. “All I ask you to do is to consider if $6.50 corn will still make things work in your operation,” he says.

And look for some selling opportunities in the soybean market, too, between now and the end of the year, says soybean market analyst Roy Smith.

“My strategy for selling new-crop soybeans is to forward-price a portion before harvest and sell the remainder on the dead-cat bounce by the end of December. The increment that I currently have forward-priced was done at $13.75 basis January futures,” Smith says. “This allows time for the basis to improve following the completion of harvest. The current basis is -1.11 below January futures. By the end of December, the basis should improve by at least 40¢ if it follows the usual pattern.”