As of June 24, the planting window for soybeans was fast closing and there was anxiety building in anticipation of two upcoming reports from USDA.
Frequent rains and cool temperatures this spring have caused delays and planting problems all spring long, pushing farmers to adjust planting decisions or declare prevent plant acres although some were still trying to get their crop planted in late June.
Producers and the market were wondering how the planting delays would impact the numbers in the final planted acreage report, one of two reports expected from USDA on June 28. The other report is the quarterly stocks report.
“Soybeans are in a very similar situation to corn. The difference with soybeans is one can plant them a little bit longer,” said Frayne Olson, grain marketing economist at North Dakota State University. “Part of the areas that have not completed their planting, at least historically, have been able to do some double crop soybeans. So the window is a bit longer for soybeans and we haven’t reached the end of that yet, but it’s coming up very quickly.
“We’re past the final planting dates for prevent plant, the date that farmers can no longer get full crop insurance coverage,” he continued, adding that producers can plant beyond that point but they’re going to start reducing the level of coverage available.
“We’re in this what they call the delayed planting period,” he said. “Again, you can still get coverage but that coverage drops approximately 1 percent per day. It doesn’t drop off very quickly to start with but after a while it kicks in to 2 percent per day, so we’re toward the end of that window.”
USDA’s newest planting numbers will be more focused on the soybean planting progress rather than corn, according to Olson. In large areas of the Corn Belt, into Ohio, Illinois and Indiana which are areas that are really far behind in terms of planting, producers did get little windows to get more planting completed recently, but it’s a guess as to how much seed got in the ground.
“(The final planted acreage report) is one of the big pieces. That will get the most attention,” Olson said.
The survey-based report is a follow-up to the prospective planting report that came out at the end of March. Farmers were surveyed March 1 to find out what they thought they were going to plant. In early June farmers were then resurveyed and asked what they actually planted.
“We pay attention to that acreage report and we can get some unexpected numbers, but they don’t normally deviate a lot from the March numbers,” he said. “But, periodically, in a year like this, it will deviate a lot.
“That acreage number will be watched very closely, but it will also be discounted because we know that when the surveys went out (in June) there were going to be big chunks of the nation that weren’t finished planting,” he continued. “We’re going to look at those numbers and pay attention to those numbers, but each individual analyst is also probably going to adjust those numbers based off of what they think the real number is.”
Olson explained that in the past when very late planting has happened, USDA resurveys and does a spot survey for those regions that have had the biggest problems. Olson doesn’t feel that USDA will come to this region and resurvey, although there are parts of the region that did have prevent plant. USDA may go back to Ohio, Indiana and Illinois, however, where frequent rains caused major planting delays.
Olson feels the second report anticipated from USDA, the quarterly stocks numbers, won’t get as much attention, but it will be equally important because it provides a look as to how fast the amount of soybeans in the system are being drawn down.
“It’s an important number for soybeans because we get some really good information on the two major uses for soybeans which is exports and crushing,” Olson said. “Typically there aren’t any big surprises in these levels for soybeans, but this year it’s going to be really important because we’re not really 100 percent sure how much is still on the farm. Normally at this time the farmers have the bins cleaned out, there’s maybe a little left on the farm, but most of the soybeans are in the pipeline.
“It’s usually not a big surprise. We get updates on export sales and inspections on the loading of the vessels, we have monthly updates on crushing, so normally that’s not something that we get worked up about,” he said, “but this year is different because we have the tariffs and we’re still a bit uncertain on how much soybean is left on-farm.”
Regarding trade relations, Olson said it has been confirmed that President Xi of China and U.S. President Trump will meet at the upcoming G2-Summit to discuss the ongoing trade war. U.S. chief negotiators will be meeting with their Chinese counterparts just before the meeting to do some groundwork and set up some talking points on the key issues.
“I don’t want to mislead anybody as there are no expectations that we’ll have an agreement at the end of the meeting. But, what we’re hoping for is that the two leaders will then have a better sense for what can be accomplished and then give orders to the chief negotiators to sit down and figure out the details,” Olson said. “At least it’s a positive thing. It looked like we were making progress and then we took this big step backward. We’ve been in a holding pattern for a while but now it looks like we’ll be hopefully moving forward again. There’s no timeline for this. We’re going to have to take this a piece at a time.”
Looking at local prices, cash soybeans for old and new crop were near $8 for immediate delivery and $7.99 for October delivery. The difference, Olson noted, is the basis levels. For immediate delivery the basis was $1.15 under and a little over $1.40 under at harvest.
On June 24 soybean futures closed for July at $9.09 and for November at $9.32.
“Even though the futures market is higher, the basis level eats that up,” Olson said, “so the cash price for delivery today versus delivery at harvest is about $8 a bushel.”
At one local elevator in west central Minnesota regularly followed in this column, as of June 25, the July cash price for soybeans was $8.19 and basis was 95 cents under. December 2019 cash price was listed at $8.34 and basis was $1.15 under.
With these current prices Olson said producers need to be checking their bins because soybean is an oil seed and stores differently than a grain.
“Wheat and corn store differently than soybeans so, at a minimum, you have to be watching and monitoring your bins very closely because you can lose a soybean bin pretty fast,” he said. “If there’s any doubt or any question that the bin is starting to turn on you and you’re starting to have some problems of spoilage, get it moved as quickly as possible.
“But I also understand on the soybean side that there’s a lot of unanswered questions,” he continued. “There’s more uncertainty right now on the soybean side than on the corn side. The reason that I think corn prices are going to be more volatile is because the amount of corn ending stocks is much smaller.
“We’ve still got a very comfortable margin on soybeans, we’ve got a lot of 2018 soybeans that have not hit the market yet, so it’s going to be harder for soybeans to have a big rally just because we have a big backlog of all the beans from last year,” he concluded.