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Beans Hit $15
-- Why Not $16?
July 2008 soybean futures hit a record high price of
$15.05 on the Chicago Board of Trade open auction platform before
settling at $14.97 1/2 on Feb. 26. The big question now is: Will prices
move higher, or have soybeans already hit their marketing-year high?
At least one economist is predicting higher prices might still be ahead.
"I don't think we're close to the market high yet in soybeans," says
Chris Hurt, Purdue University Extension economist. "Soybean futures are
already at $15/bu. The next mark might be $16. How much higher could it
go -- who knows?"
Still, the statistical probabilities for predicting higher or lower
prices are fairly simple to calculate from options premiums, notes Hurt.
"As of the Feb. 26 close, the odds are 50-50 that 2008 soybeans will
sell in a range between $12- and $17/bu. There are 26% odds of prices
below $12 for November 2008 soybean futures, and there are 32% odds of
prices above $17 for November 2008 soybean futures."
However, if U.S. soybean stocks continue to diminish rapidly, the market
could turn even more volatile, notes Hurt. "We could see price
volatility comparable to the 1970s, when soybean prices went from $8/bu.
to $13/bu. in 12 trading sessions," he says. "Then, prices dropped from
$13/bu. to $6/bu. in the same amount of time, right after the soybean
embargo."
Could price volatility really be as wild as that? "Possibly," says Hurt.
"We are within about three weeks of being sold out of exportable soybean
inventory. There is no indication that the market has done the job of
increasing prices enough yet to cut back on usage. Looking ahead, it
will take a lot of cutbacks to get the job done."
Meanwhile, the world keeps buying U.S. soybeans -- largely because the
price of the dollar keeps falling, and that keeps soybeans more
affordable for foreign buyers. "The U.S. dollar made record lows again
on Tuesday," points out Hurt. "Lower soybean prices won't come until the
market sees more cutbacks in soybean use, and there has been very little
reduction in use to date."
Barring sudden major cutbacks in demand, U.S. grain companies
will most likely stop selling soybeans originated in the U.S. to foreign
buyers within the next three weeks, adds Hurt. "The U.S. won't have any
more soybeans to sell for export soon, and if we don't cut back on use
in the U.S., we may have to import soybeans from South America," he
says. "However, because of transportation costs, it makes a lot more
sense to hold onto our own beans in the U.S. than to import from South
America."
Still, a larger-than-expected South American crop could help to lower
prices, as could major cutbacks in exports and use, notes Hurt. "Soybean
price volatility is probably going to be extreme this marketing year,"
he says. "When there is volatility, that gives us an opportunity for
high prices, but we also need to control for a potentially extreme
downside risk, as well."
Crop insurance and revenue protection coverage are good ways for soybean
growers to reduce their downside risk. Futures contracts with put
options might be another good risk-reducing tool, he says.
"As of Tuesday, a $14 put option would give you a huge amount of
downside protection, but it would also cost $1.70/bu.," says Hurt. "On
the other hand, it would leave all the upside opportunities in place in
case prices move a lot higher."
The profit margin concept is also a good approach, he adds. "When
forward pricing, you need to take into account the price of rented land,
seed, fuel, fertilizer and all your other costs to see if your profit
margin is where it needs to be," says Hurt. "Then, you gradually secure
your prices for 30-40% of your 2008 crop, but leave opportunity for
upside prices later. You'd break your soybean sales into small segments
at regular intervals, maybe every Thursday at noon from now through May,
selling about 3-4% each week until you're at 30-40% sold."
Corn and soybean markets are probably only halfway through the current
boom in grain prices, which started in 2007 and will likely go at least
until 2009, says Hurt. "None of us can know for sure, but I think we're
still reasonably early in this boom period," he adds.
To read more information about the soybean market outlook from Hurt,
click here: www.agecon.purdue.edu/extension/prices.
By John Pocock
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Corn And
Soybeans Compete For Acreage
The corn and soybean markets need to offer the right
incentives for corn and soybean acreage in 2008, says Darrel Good, a
University of Illinois Extension marketing specialist.
"That means prices should generally favor corn over soybeans for the
U.S. spring planting, and then soybean prices should be high enough from
about August forward to encourage more soybean acres in South America,"
says Good. "The market appears to be giving the correct signals for now,
but must avoid the mistake of 2006 when prices encouraged too large a
shift from corn to soybeans."
Good's comments came as he reviewed acreage and yield needs in 2008. To
continue reading this article about the outlook for 2008 corn and
soybean acreage, click here: www.aces.uiuc.edu/news.
Source: University of Illinois
Extension
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Beans Battle Back
The tug-of-war for acres between corn and soybeans
appears to be shifting back to beans in 2008. The price premium corn
enjoyed in 2007 has diminished some, and runaway fertilizer prices have
growers nervous about corn's appetite for nitrogen.
With corn peaking above $5/bu. and soybeans topping $12/bu. there's
profit in both crops. But, the prospect of $700/ton anhydrous ammonia
has some growers backing off their corn acres. It's also encouraging
growers to bring crop rotations closer to their normal cycles and
planting beans to reduce their input costs.
Industry insiders predict that soybean acreage will reach nearly 71
million acres in 2008, more than a 7-million-acre increase compared to
2007, but still short of the 75.5 million acres planted to soybeans in
2006. Most of the acreage increase will come from land planted to corn
in 2007. Experts estimate corn acres will end up around 88 million in
2008, compared with 93.6 million in 2007. But wheat and cotton will lose
acres to soybeans in 2008, as well.
To continue reading more about the battle among crops for 2008 acreage,
click here: cornandsoybeandigest.com/soybeans/beans-battle-back-0215/.
By John Russnogle
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Bioenergy
Congress Full Of Beans...And More
With soybean futures riding well above $14/bu. and the
food-vs.-fuel debate raging globally, it is clear that soybean biodiesel
and corn grain ethanol, among other biofuels, are among the hottest of
topics right now. It is also clear that neither biofuel can currently
claim to meet the growing demand for petroleum alternatives.
One estimate suggests that even dedicating all current U.S. corn and
soybean production to biofuels would meet just 12% of gasoline demand
and a mere 6% of diesel demand. Meanwhile, population growth across the
world will without doubt increase the need for corn and soybeans as
food. So where do we go from here?
On March 12-14, the Brussels Exhibition Centre, Belgium, will host the
World Biofuels Markets congress, which annually brings together
strategic decision makers from the international biofuels industry. With
more than 190 speakers, 100 exhibition stands and five pre-congress
conferences, the expo will attract in the region of 1,300 delegates from
at least 60 countries. This will be a truly global meeting representing
every continent on the planet.
Essential topics covered will be the European Union's views on biofuels,
energy quality, and tax issues, plus a worldwide view of the role of
private equity in biofuels, the emissions debate and much more. One
highlight of the congress looks sure to be a panel discussion on food
vs. fuel, climate change and land use, among other topics.
The World Biofuels Markets Expo regularly attracts all the main players,
ranging from producers to biotech developers, agribusiness to finance
and investors, government and regulators, as well as transport and end
users. These include ExxonMobil, Shell, BP, Toyota, GE Energy, Ford,
Chevron, Samsung, Mitsubishi, Accenture, Unilever, Goldman Sachs, Dow,
private investors and Virgin Fuels to name just a few.
For full details of the program and latest news, visit www.worldbiofuelsmarkets.com.
Source: Green Power Conferences
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DOE To
Invest Up To $33.8 Million To Further Develop Renewable
Fuels
U.S. Department of Energy (DOE) will invest up to
$33.8 million, over four years, (fiscal years 2008-2011) for four
projects that will focus on developing improved enzyme systems to
convert cellulosic material into sugars suitable for production of
biofuels, announced Andy Karsner, assistant secretary for Energy
Efficiency and Renewable Energy on Tuesday.
Building on President Bush's goal of making cellulosic ethanol
cost-competitive by 2012, these projects aim to address key technical
hurdles associated with mass production of clean, renewable fuels, such
as cellulosic ethanol. Combined with industry cost share, up to $70
million will be invested in these projects, with a minimum 50% cost
share from industry.
"Success of these projects will play a pivotal role in the rapid
development and deployment of renewable fuels to reduce emissions and
dependence on foreign oil, and fundamentally change how we power our
vehicles," said Karsner. "Supported by the President's ambitious plan to
dramatically reduce U.S. gasoline consumption by 20% in 10 years, the
department is on track to bring online more clean, abundant, affordable
and domestically produced biofuels at a rate and scale that will have a
substantial impact on our entire transportation sector. In the interest
of the environment, and energy, economic and national security, biofuels
must continue to play a significant role as we work to diversify our
nation's energy sources and provide a balanced portfolio of science and
technology solutions to help meet the rapidly growing demand for energy
worldwide."
To read more about the DOE's announcement on biofuels, click here: www.energy.gov/news/6015.htm.
Source: U.S. Department of Energy
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Sky's The Limit For Improved Soybean
Traits
From better weed resistance, bug defenses and stronger
disease control to traits for heart-healthy oil, biofuels and yields out
the wazoo, future soybean lines should keep growers smiling as much as
today's new plateau of prices.
Soybean breeders and others from seed companies see a horizon that
yields better varieties all the way around. So does David Wright at the
North Central Soybean Research Program. He says resistance to
Phytophthora root rot through the introduction of a new gene, improved
beans for heart-healthy oil, better weed resistance and higher yields
should benefit growers.
To continue reading this article about improving soybean genetics for
the future, click here: cornandsoybeandigest.com/soybeans/soybean-yields-future-0215/.
By Larry Stalcup
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Iowa Pocket Field Guide Available For Soybean
Management
Iowa State University (ISU) and the Iowa Soybean
Association (ISA) have developed a comprehensive soybean resource,
"The Soybean Disease & Pest Management Field Guide."
The guide contains the latest science-based recommendations on planting
tips to increase yield, including the most profitable plant population
for today's seed varieties, row spacing recommendations and planting
date recommendations. The guide also includes a section on identifying
soybean diseases that limit yield. The insect identification section
includes images that will enable the user to easily identify insects
that damage the crop, as well as beneficial insects that help keep other
insects under control.
The small-sized book is designed to fit conveniently in a pocket or a
glove compartment. The field guide pages are laminated so the user can
take it to the field without worry of damage.
Pick up The Soybean Disease & Pest Management Field Guide at your
local ISU Extension office or at local crop input suppliers that are ISU
Corn and Soybean Initiative partners. Or call the ISA at 800-383-1423.
The guide is also available as publication "CSI 0010" through the ISU
Extension Distribution Center, 515-294-5247 or www.extension.iastate.edu/store/.
The publication is offered at no cost by ISU through a partnership with
the ISA and the soybean checkoff. To learn more about ISA, visit its Web
site at www.iasoybeans.com.
Source: Iowa Soybean Association
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Minnesota
Offers Barriers To Bushels Seminar In Early March
To help address key management issues of southwestern
Minnesota producers, Barriers to Bushels seminars will be held at two
locations in early March. This is a program developed by the University
of Minnesota Extension aimed at current issues and research in crop
production with the intent to ultimately help increase a producer's
bottom line.
Topics include residue management, corn on corn management, fungicide
and soil amendment research, and soybean yield and pest management. Read
more at www.extension.umn.edu/cropenews.
Source: University of Minnesota
Extension
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Ohio Economist
Analyzes Farm Bill At Upcoming Farm Forum
With the 2002 Farm Bill coming to an end in March,
Congress continues to work toward compromising on House and Senate farm
bills that call for increased spending on a broad array of farm bill
programs -- while the President has threatened to veto a farm bill that
pays for higher spending by raising taxes.
"A major issue is President Bush's stance on not wanting to raise taxes,
and I think it's fair to say both farm bills do have elements in their
financing packages that could be considered to be tax increases," says
Carl Zulauf, an Ohio State University economist with the Department of
Agricultural, Environmental and Development Economics. "I think the veto
threat is real and will have a substantive impact on the final version.
All of the statements coming from the House and Senate point to the idea
of not passing the farm bill to just simply have it vetoed."
Zulauf will discuss the 2008 Farm Bill as part of the 17th annual 8th
District Farm Forum taking place on March 1 at Edison State Community
College in Piqua, Ohio. The event, which begins at 10 a.m., is free and
open to the public. Zulauf's discussion is part of an expert panel that
will cover a variety of agricultural issues.
Congress is pushing to have a farm bill ready to go by March 15, but
Zulaf says he is banking on an April 1 to May 1 rollout date. "Planters
will start to roll during the month of April," he says. "There is a
desire for farmers to have some idea of what programs are going to be in
place for last-minute planting decisions."
For more information on the farm forum, call (800) 582-1001 or log on to
boehner.house.gov/farmforum.
Source: Ohio State University
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Biodiesel Offers Safe & Affordable RINs For
2008 & 2009
The National Biodiesel Board welcomes the
Environmental Protection Agency's (EPA) publication of the new 9 billion
gallon renewable fuel standard (RFS) for 2008.
NBB CEO Joe Jobe explains how biodiesel is an important component and a
huge value to the current domestic petroleum marketplace. "In 2008, we
anticipate the domestic biodiesel industry will produce more than 500
million gallons or at least 750 million worry-free renewable
identification numbers (RINs), which can be used by the petroleum sector
to meet its renewable fuel requirements in both 2008 and 2009."
The petroleum sector is preparing for compliance with the updated RFS
and must secure enough infrastructure to move renewable fuels in the
marketplace. All RINs generated in 2008 will meet the minimum lifecycle
analysis of 20%, which, according to Congress, is required to carry a
renewable fuel RIN into 2009.
"Biodiesel RINs offer 'safe' RINs for the petroleum industry," says
Jobe. "First, biodiesel will exceed the 20% lifecycle greenhouse gas
reduction requirements for the base renewable fuel mandate in 2009. In
fact, according to a USDA/DOE lifecycle study, soy-based biodiesel has a
78% carbon dioxide reduction. Second, biodiesel can be used in 2008 and
the RINs can be safely carried forward to 2009, which means the RINs can
be sold or purchased without fear of whether or not they will be valid."
To continue reading this article about meeting renewable fuel
requirements through biodiesel, click here: nbb.grassroots.com/08Releases.
Source: National Biodiesel Board
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Going The Extra
'Green' Mile
As today's businesses begin to put extra emphasis on
eco-friendly practices, a new SmartWay Grow & Go program has been
designed to help with that effort. The program will match businesses
that want to ship "green" with truckers who use biodiesel. The
match-making program is a team effort between the U.S. Environmental
Protection Agency (EPA) and the National Biodiesel Board (NBB).
The goal of the SmartWay Grow & Go program is to increase energy
efficiency while significantly reducing greenhouse gases and air
pollution, as well as reducing U.S. dependence on petroleum.
Of the unique program, Mitch Greenberg, EPA SmartWay program manager,
says, "Grow & Go was developed to help increase the use and acceptance
of biodiesel in the freight industry, and to educate truckers and small
fleets on the benefits of biofuels. It became clear there was a need to
help shippers identify carriers using renewable fuels."
Likewise, on the trucking side, Andy Meyer, vice president of business
development for Green Initiatives Safe Handling, Inc., says, "Partnering
with the EPA SmartWay Grow & Go program is a great way for us to learn
fuel-saving techniques that help reduce emissions, as well. Our
customers are keenly interested in working with sustainable suppliers
and our partnership with EPA SmartWay Grow & Go is one more reason for
them to use us for their transportation needs."
Members of EPA SmartWay Grow & Go include owner-operators, trucking
fleets, suppliers, brokers and anyone who is interested in less fuel
use, emissions reduction and sustainable trucking practices. For more
information, visit www.epa.gov/smartway/growandgo/.
To read more information about NBB programs that tout biodiesel use,
click here: cornandsoybeandigest.com/biofuels/creating-biodiesel-buzz-0215/.
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Soy Sculptures
Eighteen giant fiberglass soybeans came to life in
Iowa in 2007. The 4-ft.-tall soybeans were part of a unique effort
initiated by the Iowa Soybean Association (ISA) called "Soy on Parade."
The sculptures were created by Iowa artists to visually communicate the
value and unique uses of soybeans to the state, nation and world. They
were then displayed at various events -- including at the state capitol
-- throughout the year before being auctioned off in September to help
fund scholarships for Iowa students pursuing degrees in ag-related
fields. Over $20,000 was raised from the sale of the soybean sculptures.
While the fundraising aspect of the Soy On Parade effort was a huge
success, the large artistic beans also were successful at raising
awareness about the variety of important uses of one of Iowa's top
crops.
Cate Newberg, marketing manager for ISA, says, "The topics displayed on
the giant soybeans included everything from soyfoods, biodiesel and soy
in aquaculture to soybean research and environmental issues. It really
opens people's eyes to all the possibilities that soy brings to Iowa.
To continue reading this article about soybean sculptures on parade,
click here: cornandsoybeandigest.com/soybeans/iowa-soy-sculptures-0215/.
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What's The Biggest Soybean-Consuming State Of
All?
When most people think of agriculture and soybean meal
(SBM) consumption, they think of the Midwest; however, the top five
SBM-consuming states may surprise you.
The state that has the most animal consumption of SBM is Iowa, using
more than 3.3 million tons of SBM each year. The other top-four
SBM-consuming states are North Carolina, at more than 3 million tons;
Arkansas and Georgia, at roughly 2.1 million tons each; and Texas, at
1.9 million tons of SBM each year.
The United Soybean Board (USB) and soybean checkoff work to communicate
the importance of animal agriculture to U.S. soybean farmers by showing
them how SBM consumption by animal agriculture directly impacts farmers'
bottom lines. For more information about USB programs and activities,
click here: www.unitedsoybean.org/.
Source: United Soybean Board
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Biodiesel
Difficulties: A Note From The Soybean E-Digest
Editor
With soybeans and soybean oil at or near record
prices, the biodiesel industry may be facing some difficulties in
producing soybean biodiesel cheaply enough to compete with regular
biodiesel.
If you're a manager of a soybean-based biodiesel plant and would like to
provide information on how the industry will be able to survive and
thrive in the current economic environment, I'd like to hear from you.
You can write to me (John Pocock) at: jpocock@csdigest.com. Just let me
know who you are, where you work and why you think the future is
promising for soybean-based biodiesel. I plan to share whatever I find
out in a future issue of the Soybean E-Digest.
As always, if you have any thoughts on what you like or dislike about
this issue or have ideas on what you'd like to see more of in future
issues, please feel free to let me know.
I hope to hear from you soon. Thanks for your readership.
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