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| "1. Since soybean production is large in both the U.S. and South America, with harvest separated by roughly six months, there is really not a distinct marketing year for soybeans. This is very different from corn where production is still concentrated in the northern hemisphere. It is not difficult to imagine, then, that the demand for soybean stocks is very different than the demand for corn stocks, resulting in a poorer fit between stocks and price. That is, the world soybean market is more similar to the wheat market than to the corn market. Wheat is produced in substantial quantities in various parts of the world with a wide range of harvest dates so the demand for stocks is likely quite weak. The relationship between the stocks-to-use ratio (domestic or world) and average U.S. marketing year farm price is extremely limited.
2.The value of soybeans is derived from the value of soybean meal and soybean oil which are produced in relatively fixed quantities when soybeans are processed. The markets for the two products are very distinct with soybean meal predominantly livestock feed and soybean oil predominantly for human consumption, with a recent increase in fuel consumption. The price of those two products in any given marketing year is derived from the interaction of supply and demand in each market. Those interactions can vary considerably from year-to-year, resulting in various combinations of prices and therefore substantial variation in the derived value of soybeans. As a result, forming price expectations for soybeans requires the hard work of evaluating supply, demand, and price prospects for meal and oil. Unlike corn, projecting the stocks-to-use ratio for soybeans does not provide a very useful shortcut for forming price expectations."
Thanks, Zen.
Throw in the Chinese-US tariff war as a 3rd point and lack of knowing what their true soybeans needs are at this point. Who knows what China is going to do? My guess is we go substantially higher. Just a guess.
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Tariffs ain't the only trouble for beans.
