Traders caught between demand bull, bearish supply ideasNormally, soybeans would be more prone to put in a bottom in August on a decline from June. This year is different. A low was put in during June to July and a counterseasonal rally has occurred. It has been the consistent demand by China and other world buyers (mostly China) that has floored soybeans.
By: Sue Martin,
Normally, soybeans would be more prone to put in a bottom in August on a decline from June. This year is different. A low was put in during June to July and a counterseasonal rally has occurred. It has been the consistent demand by China and other world buyers (mostly China) that has floored soybeans.
China’s appetite for U.S. soybeans is exceeding that of last year’s record pace. Aug. 19’s export sales of 72 million bushels of new crop soybean sales was anticipated by the trade. Still, it is perhaps the highest I can recall. China has endured a growing season of very poor weather conditions. First droughts in the south and parts of the north, then came the rains and the floods. Like Iowa, too much of a good thing. Recent news reports show people perishing in mudslides and if people are perishing so are animals. Livestock is raised more-so in the southern regions of China, while most crops are raised in the northern provinces. However, nearly all major grain- and oilseed-producing regions have been devastated by the rain. I would suspect that disease is on the rise there as well.
But what about the U.S. soybean crop? Oilseeds are going to be in tight supply this next year.
In Iowa, heavy rains plagued the state from May to the first week of August. Temperatures for much of the growing season have run above normal with high humidity. With so many producers using Roundup Ready soybeans, following up with more than two years of compaction, the good bacteria in the soil has been depleted according to plant pathologists and agronomists. When this occurs, especially under hot humid conditions, the pathogen for Sudden Death Syndrome for soybeans occur. This summer’s weather has provided the perfect climate.
The yearly Pro Farmer Crop Tour occurred this week. Common rhetoric is that the soybean pod count is higher this year than what it was in the 2009 crop year.
Pod counts are fine, but it doesn’t make any difference when you have SDS in the fields. Iowa is one of the nation’s top-producing soybean states, and the amount of SDS in Iowa is at record levels.
Many growers think that after dealing with SDS this year, they will plant more second-year corn in 2011. Good news for the fertilizer dealers, but doing so is not going to alleviate or minimize the damage that soybean diseases could do next season. The same Fusarium that would cause damage to the soybean crop is still in the soil and also will cause root damage and early death to corn planted in the same field.
Minnesota clients tell me that they have a great deal of anthracnose in their corn. This is another one of these pathogens lingering after the SDS. Diplodia and mycotoxin also are present. According to my plant pathologist and agronomist friends, efforts to improve plant health of the seedlings needs to be implemented for next year.
It is imperative that the US produce a large crop as I suspect that China is going to be needy again this year. Accelerating world usage of soybeans seen in 2010 to ’11 owing to production losses in rapeseed, sunflower seed and other oilseed crops should put a floor under the soybeans this fall.