Soybean prices taking high road in Ohio

COLUMBUS – Ohio soybean growers who managed to weather the lashings Mother Nature gave their crops in the form of rain and diseases are reaping the benefits of record yields and high harvest prices.

National shortage. Because of a national soybean shortage brought on by a significant decline in production in western states like Nebraska, Missouri and Iowa, and continued consumer and export demands, harvest prices have rallied over the past three months from $5.50 a bushel to nearly $8 a bushel.

According to the National Agricultural Statistics Service, market year average price is projected between $6.05 and $6.95 per bushel, up from $5.53 in 2002.

With such promising soybean prices, Ohio growers are poised for a stellar grand finale. Average yield is projected at a record 42 bushels per acre in Ohio.

Reversal of 2002. “It’s really an interesting reversal from last year,” said Matt Roberts, an Ohio State University agricultural economist. “There was a short crop in Ohio, while growing conditions were nearly perfect out West” in 2002, Roberts said.

“So while prices did increase, Ohio was not in a position to take advantage of that because we did not have large yields. But this year, the advantage of being in Ohio is not only do we have high prices, but we have pretty good yields, unlike the western part of the country.

“So those farmers who could get their crops established and didn’t have disease issues are producing an incredible soybean product this year.”

Prices going up. The good news for growers who have yet to sell their beans is that prices may continue to rise.

“Clearly we have fewer beans this year,” Roberts said. “We have a much higher price because of that, which is meant to discourage the consumption and export of beans.

“But we are not seeing demand slow down. That indicates that prices still do have room to move upward. At the rate we are consuming and exporting soybeans, we will run out of soybeans long before next year’s harvest.

“All of this, of course, is what is creating the confusion and uncertainty with the markets.”

Corn production. On the flipside, the issue with corn production is much less exciting. Weather conditions that devastated the soybean crop in the West did little to impact the corn crop.

And although Ohio corn growers may also see projected record yields of 145 bushels per acre, consistent national production and average prices are generating a balanced market.

“It looks like we will consume about as much corn as we produced,” Roberts said. “Corn prices have not moved significantly over the past three or four months.”

Corn prices are about $2.40 a bushel. Market year average price is projected between $1.90 and $2.30 per bushel compared to $2.32 for last year’s crop.

Bright spots. Roberts said a few bright spots exist with U.S. corn production, however.

“So far corn exports have been solid,” he said. “And the other big news is that ethanol demand continues to accelerate. This year about 900 million bushels of corn – or roughly 8 percent of the harvest – will go into ethanol, and analysts think that projection is short by a few million bushels.”

Ethanol demand may push average corn prices up by another 10-15 cents, Roberts said.

Ethanol future. The question remains how the market will react as ethanol demand increases in the future.

“In two years, we may be looking at 1.2 billion bushels going into ethanol. In another four years, 1.5 billion to 2 billion bushels of corn,” Roberts said.

Such continued profitability for corn, even at $2.30 a bushel, is what continues to steer growers toward corn and away from soybeans, he said.

Corn or soybeans? “There’s less global competition in corn, especially with South America continually expanding soybean production,” Roberts said.

“Looking at the current projections, Brazil will produce 15 percent more soybeans this year than last year.

“Maybe with the exception of China, no one has really expanded into corn production like that. For many American farmers, selling 200 bushels of corn at $2.20 a bushel sounds more attractive than selling 80 bushels of soybeans at $5 a bushel. That’s where we are seeing U.S. crop production going.”