This column is believed to be reliable and During the first two weeks of June, July wildest expectations of many bulls. Few
Doug Tenney includes the author’s opinions. Unforeseen CBOT soybeans reached $12.91. The existed just a few months ago in March. In
LeisT MercanTiLe and changing circumstances can change price July/November soybean spread has con- early March, July soybeans had dropped to
outlooks and direction. Neither Ohio’s tinued to invert (July higher than $8.41. Analysts and producers alike were
Managing
Country Journal or Tenney assume liability November) in an ever-increasing fashion touting the demise of soybeans. They sure-
for their use. Doug Tenney is a licensed com- since March. At that time, it was trading ly were a crop destined for a huge price
the
modity broker. Copyright 2009, Doug about 50 cents, July above November. At decline. Expectations for a much larger
Market
Tenney, all rights reserved. E-mail address is this writing the spread was trading at 2009 U.S. crop pointed to soybean acres
dtenney@leistmercantile.com. Leist $1.73, July above November. this year reaching 80-82 million acres. Last
Mercantile specializes in marketing strategies The last several months we have seen year, the United States planted 76.7 million
and crop insurance coverage. Contact them demand for old crop soybeans increase acres of soybeans.
at 1-800-231-6660. dramatically, likely beyond even the Sharply higher input costs for corn led
the charge for higher soybean acres in
2009. Some producers had even skewed
their mix of corn and soybean acres to one
that leaned heavily on soybeans with a few
even going with 100% soybeans in an
effort to save money. The cry of concern
this spring was one of saving money on
inputs. Yet, producers feared their soybean
crop this fall would be worth a lot less
money as projections were rampant that
cash soybeans this fall could be worth $7,
and perhaps $6, or less.
Demand continues to be strong for old
crop soybeans even though the news sev-
eral times a week for the past month has
postulated about rumors of China cancel-
ing several cargoes. Recently, there have
been reports of China delaying purchases
or moving the shipment time for delivery
this fall. Crush margins in China during
May were in the red as boatload after boat-
load of previously purchased soybeans
continued to arrive at its ports.
Basis levels for old crop soybeans in
central Ohio last month reached July plus
30 or more depending upon the quantity
available. Crush margins in the United
States reached at least 85 cents last month,
an unprecedented level for this time of the
Financial expertise to create golden opportunities
year. High demand for U.S. soymeal was a
huge factor.
from amber waves of grain.
Soybean production in Argentina this
year is estimated to be only 32 million tons.
Drought has affected their crop in a huge
Confidence is the first thing you gain by relying on KeyBank. That’s because you’ll receive an fashion as projections in January indicated
exceptional level of expertise and guidance – just what you would expect from one of the
their crop would be 49.5 million tons. Last
year they produced 46 million tons.
nation’s leading Agribusiness lenders. With KeyBank you can also count on:
Argentina is typically the world’s largest
t Sound advice and insights – KeyBank aggressively keeps up on matters facing our
exporter of soymeal. Many of their foreign
buyers were counting on the Argentina
diverse Food and Agribusiness clientele. soybean crop to again be large, enabling
t
them to buy soymeal hand to mouth at
Greater value and efficiency – our Relationship Managers are experienced in creating
ever-decreasing prices. Or so they thought.
customized financial plans for food and agricultural companies, involving everything
These buyers were forced to come to the
from cash management and credit to leasing and investment banking services.
United States for their meal needs.
In addition, China for several months
t Comprehensive vertically integrated business solutions – KeyBank has the expertise and
has made a huge effort to build their
products that can benefit suppliers, growers, processors, packagers and distributors.
reserves of soybeans. It has done so with a
lot of U.S. purchases. The Chinese buying
along with the drought in Argentina are
To learn how Key can help you grow your business, contact Larry Davis at 614-442-6063. two huge reasons that have pushed soy-
bean prices to current levels.
The story for grain prices has been one
of old crop soybeans for the past several
months. The next developing story could
be for new crop corn. Any weather con-
cerns of the next two months will be quick-
ly manifested upon corn prices. USDA has
already decreased their yield estimates for
the 2009 corn crop by 2 bushels per acre to
Visit key.com/agribusiness today.
153.4 bushels per acre. The lateness of
planting the crop has to be a huge reason
for the decrease. Any hints of lower yields,
or increasing demand for exports or
ethanol, could easily lower next year’s
ending stocks 200 to 400 million bushels
lower. If that happens, December CBOT
Credit products are subject to credit approval. ©2009 KeyCorp
corn could reach $5.30.
CS93048
12Markets•Ohio’s Country Journal • July 2009
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