According to "Murphy's 'Law,' if anything can go wrong-- it will." Another saying is that "there's no good way to do the wrong thing!" Both of these somehow seem appropriate if you've still got old crop soybeans in storage.

The 2000 soybean crop was record production capping out the four largest soybean production years ever. Higher nitrogen prices along with CCC loan rates that favor soybeans suggests an acreage shift from corn to soybeans in 2001. Production from more acres would add to already abundant supplies. South American production has also been growing in recent years and now a record crop is being harvested there. In spite of very strong Worldwide consumption, U.S and World ending stocks are expected to increase--always a negative price factor. These supply and demand factors all contributed to sending soybean prices to contract lows in February (May $4.44).

The occurrence of a "February Low" follows normal seasonal patterns, but a contract low is unusual in February. Prices usually recover from winter lows into spring and it appeared that the spring rally was beginning to happen. Last week the May soybean contract had rallied twenty cents or more and Central Missouri Basis had also improved. No one expected a major rally, but prices were improving. Many analysts were looking for, at least, a technical price retracement to provide an opportunity to clean up old crop sales.

While the final impact on total use probably won't be large, foot and mouth disease in Britain raised concerns about feed export demand. This concern and lack of good news in USDA's March Supply and Demand Report stalled the price rally from the February lows. Then, news that foot and mouth disease had to spread to other European countries and an outbreak in Argentine added to the "bad news" for soybean demand. As a result soybean prices have dropped sharply with the May soybean contract dipping below the February lows on Wednesday and Thursday (March 14-15).

It is a very discouraging price situation for those with remaining old crop soybeans in storage. This week's exports were better than expected; illustrating that demand remains strong. However, this "good news" failed to produce much in the way of a price recovery on Thursday. About the only thing left to rally prices would appear to be the weather. However, the current longer range predictions seem to be leaning toward wetter weather and delayed planting--conditions that often lead to more soybean acres!

What to do with old crop beans? It appears that almost anything that could go wrong for soybean prices has gone wrong. While the bearish news may be overdone, a significant spring rally doesn't appear likely and long term storage into summer is very risky. Without improved supply and demand news, about the best hope is a price bounce that offers a chance to "cut your losses." There just aren't any good answers when your choices come down to assuming more risk by continuing to store or accepting losses by selling. At his point, storage hasn't been the thing to do and there's no good way to do the wrong thing. ---Melvin

Decisive Marketing - March 9, 2001
http://outreach.missouri.edu/agconnection/DCT/DM010316.html -- Revised: April 20, 2004
breesm@missouri.edu