Play Turner’s Take Ag Marketing Podcast Episode 263

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Today we take a deep dive into soybeans and where we think old crop and new crop prices could be going.  We also talk about soybean oil, corn, and the KC vs Chicago wheat spread.  Make sure you take a listen to this week’s Turner’s Take Podcast

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Soybeans

We are still bullish soybeans but our range remains $12.00 to $15.50 based on the current carryout estimates.  Rains are falling in South America and that should help stabilize the crop.  The correction in prices has lead to greater export demand.  Time will tell if Arg and Brazil have the beans or not.  If production is lower this season we could see soybeans at $15 later this winter or early spring.

Below is my supply and demand table for old crop and new crop.  For new crop we are estimating 91mm acre and 50.5 bpa.  At those levels the US new crop production equals the total usage.  Soybean stocks are still around 140mm bushels and a 3% stock/usage ratio.  The bull market in soybeans should be a two year story at minimum.

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Soybean Oil

Below is a chart of annual global vegetable oil stock/use and soybean oil highs dating back to 2006.  For soybean oil prices I rounded to the nearest cent.  The point of the table below is to show how global vegetable oil usage has inelastic demand. It doesn’t seem to matter what vegetable prices are any given year.  Demand has grown year-over-year since 2006.  It grew during the drought years. It grew during the Chinese ASF and tariffs years.  Demand is expected to grow this year and most likely next year too.

Moral of the story is global vegetable oil is in tight supply.  Soybeans are in tight supply.  In 2008 soybean oil traded as high as 70 cents/lb.  In 2011 to 2013 period soybean oil was consistently in the 50s.  We think price go back to the 50s this year and next year until global soybean supplies can be build back up to adequate levels.