CHICAGO (Reuters) — U.S. farmers took advantage of a rally in the futures market last week to book sales of soybeans they have yet to plant.
Dave Newby, a farmer in Bondurant, Iowa, booked sales totalling half of his expected 2015 soybean production when new-crop futures topped US $10 a bushel on Feb. 27, figuring prices had no place to go but down as planting approaches.
“I thought it was a good opportunity to get started,” said Newby, who plans to devote about one-fourth of his 800 acres to soybeans in 2015. “I am kind of worried that when it is all said and done, there is going to be a lot more soybean acres than what the U.S. Agriculture Department is currently saying.”
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New-crop sales are typically sluggish during the winter months as farmers are busy finalizing planting decisions and determining the best time to move supplies they still had left from the previous harvest.
But a truckers’ strike in Brazil provided an unexpected boon to U.S. farmers. Soybean futures had been expected to fall in February due to forecasts for record crops in Brazil and Argentina that were seen flooding the market and slashing export demand for U.S. offerings.
The shipment problems have slowed deliveries of the bumper crop to ports and processors, keeping buying interest focused on U.S. markets for longer than usual.
New crop soybean futures rose 5.5 percent in February, compared with an average February gain of just 2.2 percent during the previous 20 years.
“It caught a lot of interest,” a grain merchant in eastern Indiana said. “There was a lot of guys selling just one or two truckloads. It was pretty broad across the whole population we talk to.”
Cash prices for November delivery ranged from around $9.50 to $9.80 per bushel in the U.S. Midwest by the end of the month. That compares with the USDA’s forecast of an average soybean price of $9.00 for the upcoming crop year.
But some farmers willing to wait, betting that the shipment issues in South America will persist.
“We may have a better opportunity yet to get some of the 2015 sales started,” said Jim Reed, a farmer in Monticello, Illinois. “The farmer checks the markets three to four times a day. When we see these little opportunities show up, hopefully we are poised and in a position to make that call and pull the trigger on some sales.”
