Argentine sales could depress summer market

PHOENIX, Ariz. — A big wild card could depress soybean and canola prices this summer, say analysts.

“One of my very good friends is probably one of the greatest traders in the world and he believes we are going to see Argentina release a lot of beans come June, July, August,” said Mark Gold, owner of Top Third Ag Marketing.

Old crop soybeans from Argentina hitting the market just as U.S. farmers are poised to harvest what is expected to be a huge crop of 2015 soybeans could spell trouble for soybeans and other oilseeds, such as canola.

“There is no telling what the low (will be) in this bean market,” Gold said during an interview at the 2015 Commodity Classic.

Chip Nellinger, futures market specialist with Blue Reef Agri-Marketing, agreed.

He said Argentina’s farmers have been hoarding soybeans as a hedge against inflation and falling currency.

“Why sell them today when they’re just going up in value tomorrow?” he said.

That doesn’t sit well with the government, which relies heavily on the tax revenue generated when farmers sell their soybeans.

“It has kind of been a cat and mouse thing,” said Nellinger.

The government is threatening to impose policies and penalties that will encourage farmers to sell their stockpiles.

“I’ve heard estimates up to a third of their old crop production is still unpriced,” he said.

Nellinger agreed that could pressure soybean prices down, given the record new crop being harvested in South America and prospects for a massive U.S. crop.

The U.S. Department of Agriculture said in its first U.S. crop seeding outlook of the year that American growers could plant 83.5 million acres to soybeans in 2015, which is down slightly from last year.

The forecast surprised analysts, most of whom expect more soybean acres.

“I guess they must have legalized marijuana in Washington, D.C.,” said Gold. “I think it’s absolute nonsense.”

He expects 88 million acres of both corn and soybeans, which would be a record-smashing soybean crop.

“One thing we’ve certainly seen are the catfish ponds being torn up and those areas being put back into corn or beans,” said Gold, who recently toured Louisiana, Mississippi and Alabama.

Nellinger is forecasting as much as 90 million acres of beans based on his conversations with seed dealers.

“They’re saying pretty consistently our bean sales are way up and our corn sales are flat to lower,” he said.

“I think you could pick up two million acres just in the south.”

Gold is more concerned about yields than acres. Yields keep improving, which means lower prices for both crops, especially if Argentina swamps the market with old crop soybeans.

“Could we see sub-$8 beans? You bet. Could we see sub-$3 corn? You bet,” he said.

New crop November soybeans were trading at about $9.95 a bushel March 2, while new crop December corn was trading at around $4.15.

Gold advised growers to price 20 to 25 percent of their new crop corn and soybeans, taking advantage of the recent price rally sparked by Brazil’s trucker strike.

“I’m a strong advocate that you need to be doing something right now and take advantage of these rallies that we’ve seen in this market,” he said.

Nellinger agreed, saying growers need to pounce when soybeans approach $10 per bushel like they did last week.

“This isn’t the year to sit back and do nothing. You’ve got to have a plan. You’ve got to manage the risk and take advantage of rallies,” he said.

Nellinger expects canola prices to closely track soybeans, so the same advice goes for canola growers.

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