Soybean Market Early Feb 2012 Alive as Factors Fall place for US Soybean Export

Soybean market came alive in early February 2012 as factors began to fall into place for U.S. soybean exports. Late in 2011, the USDA had projected the South American soybean crop would run 100-200 million bushels larger than last year's crop. "All eyes are on South America, and trying to look at the size of the crop," said Al Kluis, Kluis Commodities.

Soybean, on Feb. 3, the March 2012 contract closed at $12.32, May at $12.40, July at $12.50, August at $12.49, September at $12.42, November at $12.35 and January 2013 at $12.43.

"Soybeans at $12 are a fair value for both the farmer and the end user, but growing $12 soybeans at today's cost is not a real ‘get rich proposition'," he said. "It's really helpful the U.S. dollar is as low as it is. The international buyers still look at our prices as being competitive."

Ahead of the Feb. 9 World Agricultural Supply and Demand Estimate, traders expected the USDA would lower the soybean crop in Brazil, Argentina and Paraguay by 200-250 million bushels below the final 2011 crop size.

"This has had a really dramatic effect on what our export prospects are for the U.S. and also on our future global supply reports," Kluis said.

U.S. exports and the soybean carryover were not stellar this January. The 2010 carryover was forecast at 140 million bushels in early February 2011. The 2011 carryover was forecast at 275 million bushels in early February 2012.

In addition, U.S. soybean export sales for the final week of January were 308,400 metric tons for the current marketing year (11.3 million bushels) and 60,000 metric tons for next year (2.2 million bushels). In general, 20 million bushels per week is considered bullish for soybean export sales.

But traders were noting the smaller than expected South American soybean crop.

"When South America has production problems, their pain is our gain," Kluis said. "The soybean market has put on 80 cents a bushel just because of the recent production problems in South America."

Compared with prices back on Jan. 20, 2012, the March contract was 47 cents higher, May was 46 cents higher, July was 47 cents higher, August was 48 cents higher, September was 50 cents higher and November was 51 cents higher.

Kluis said that prices were not at a level where rationing will occur.

At an elevator in western Minnesota followed in this column, cash soybeans on Feb. 3, 2012 were $11.77 with a basis of 56 cents under per bushel. Compared with a price on Jan. 20 of $11.35, the price was 42 cents higher and the basis had narrowed by 2 cents.

"Watch what's going on in South America and Ukraine," said Kluis. "We have an evolving weather problem. It's something that will continue to have a market impact."

Category: Soybean, soybean commodity, soybean market, soybean prices, us soybean export