Soybean prices have remained high for several weeks in a row, but even with those high prices, demand for soybeans has remained very good over that time.
“In soybeans, we continue to see decent demand, both export-wise and domestically,” said Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D. “Basis levels have tightened up and are sitting fairly tight right now as end-users try to get beans brought out of the hands of producers. There’s not a lot of selling taking place because guys don’t know what they’re going to get planted, so they’re a little afraid to push selling a lot this year because they do have some in the bin. They want to make sure they get their contracts met for the new crop first.”
At one elevator in western Minnesota regularly followed in this column, as of June 8, the June delivery price was $16.80 per bushel and basis was +10 cents over. The October 2022 futures price was listed at $15.66 and basis was +16 cents over.
One factor that has had an impact on the market is that planting progress in the region has been a little slow.
“We are a little behind, although we made good progress (for the week ending June 3) for soybean planting. But we’re still 1 percent behind the five-year average pace and a little less than expected by the trade,” he said.
As of the first week of June, North Dakota, South Dakota, Minnesota continued to be the three states that are lagging (in planting progress), with North Dakota being the biggest one at about 44 percent behind its average pace for this time of year.
Martinson pointed out that the weather forecast for mid-June called for conditions more conducive to get more planting done.
“This next 10 days …from June 10-20…looks to be warm and dry and it’s going to pull rain out of the forecast. That will push the soybean planting and get more soybeans planted and it may lower our potential for prevent plant a little bit,” he said. “Right now, it’s going to be what Mother Nature lets us get planted. The Corn Belt continues to have good progress and is seeing good advancement and their crop looks good. It’s going to be the Northern Plains and what’s questionable up here.”
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Martinson also pointed out that the war in Ukraine does not have as much impact on the soybean market as it does on corn. In Ukraine, sunflowers are more the issue and that is helping with the vegetable oil side of things and that’s helping to put some underlying support in soybeans.
Even bigger, for both corn and soybeans, is the EPA and the Administration coming out with their biofuels mandates, which are actually a little higher for renewable diesel fuel.
“That’s positive for bean oil, so these numbers came out to be friendly and it’s likely going to help spur a little more development on that side and for some demand,” he said. “That part is friendly to the beans side. I think we’re going to see more acres get planted (to soybeans) as guys get in the fields. That’s going to be the crop that’s going to be their ‘go to,’ and that might start depressing the soybean market a little.”
While there has been a lot of talk about the emphasis on food versus fuel, Martinson feels that has been a bad debate.
“Everyone is worried that we’re going to run out of grain in the world. We’ve got tight supplies, but it’s more of a logistics issue than (anything),” he said. “It’s more of getting the product from where it is to where it should be and that’s more of the bigger problem. And just the high cost of energy to move the product is also helping to add a little trouble into that, as well. Right now, I think the food versus fuel debate is a good attention-grabber for the politicians.”
Another point of interest this spring has been the high cost of field and fertilizer, but Martinson feels those costs really haven't slowed down producers a lot.
“They’ve had to do some extra tillage this year just to go out and try to work a field or try to get it to dry out just to break that crust,” he said. “There’s been a little extra tillage being done in some areas, so the fuel prices, the way it appears, haven’t slowed down producers’ ability to get out and get things done.”
Following the writing of this column, USDA came out with its crop production report on June 10. As of June 7, soybean exports were 45-50 million bushels ahead of projections, so Martinson feels that, at this time, USDA will have to increase soybean export projections.
“That’s going to tighten up the supply numbers and that’s going to be somewhat friendly to soybeans,” he said.