May USDA crop report bullish on soybeans
As one might expect, too many producers have overreacted and as a result the May Crop Report showed planted soybean acres at 83.5 million acres versus last year’s 87.1 million, says Richard Brock.
By Richard Brock
The pendulum always swings too far in every direction. This year is not any different. Last fall corn and soybean prices indicated a much better profit potential for Midwest farmers to plant more corn and less soybeans. Same is true in the Mississippi Delta where it was clear that corn would be more profitable than cotton.
As one might expect, too many producers have overreacted and as a result the May Crop Report showed planted soybean acres at 83.5 million acres versus last year’s 87.1 and corn acres at 95.3 million acres versus last year at 90.6 million. The market has reacted very quickly as soybean prices have rallied sharply and corn prices are continuing to be weak.
Unfortunately, over the last few years Brazil has gradually risen to the largest soybean producer in the world. The gap between U.S. production of soybeans and even with corn is remarkable at best.
Acreage Shift Too Dramatic
The shift from soybeans and cotton to corn has been dramatic but the shift from planted acreage in the U.S. versus Brazil has been even more dramatic as can be seen in the charts below. The impact is going to be felt by everyone in the feed industry.
What is that impact? Soybean meal prices are making a long-term low. The downside price risk is far outweighed by the upside price risk. This is a buyer’s market.
The price swing in corn is not going to be as dramatic. With carryover on corn for the 2024/25 pegged at approximately 1.4 billion bushels and next year at 1.725 billion bushels, this is not the kind of a market that normally results in a major bull move. Everyone can be much more conservative buying corn.
Richard A. Brock is Chairman of Brock Holding Company which is comprised of Brock Associates, an agricultural marketing advisory service and publisher of The Brock Report, established in 1980 and Brock Investor Services (futures and options brokers). The firm, based in Milwaukee, WI, now has six offices and manages grain sales on approximately 800,000 acres throughout the U.S. and is an advisor on purchasing strategies for many large poultry, pork, dairy and food companies.
