$7 Soybeans? Record Stocks-to-Use Pulling Oilseed Prices Lower

With the recent rally in soybeans looking like it might be over, there could be some major downside to oilseed prices, according to the chief economist for AgResource Company.

Bill Tierney, speaking at the Cereals North America conference in Winnipeg last week, called the rally “seemingly inexplicable,” as there were no significant changes in U.S. or global soybean supply/demand fundamentals.

“This year, if you combine all the major oilseeds, we’re projected to have record ending stocks-to-use, compared to the previous 30 to 40 years,” he explains in the video above. “If they’re projected to be a record level, and we grow even more next year, I see mostly downside price risk in this market.”

The October rally in soybean prices was largely driven by a short-term shortage for soymeal in the U.S, notes Tierney.

“It seems to be a function of soybean users having nothing in store coming into the new marketing year, and because of transportation and logistics problems, they’re not able to get it. So they’re panicking,” he says.

If the South American soybean crop lives up to current projections, Tierney says January and March futures could drop to the mid-$8/bushel range. And he expects the downward trend will continue through next year’s North American growing season.

“I think next year, particularly if North American farmers plant more oilseeds than they did last year, I think we’re possibly looking at soybean futures prices at harvest a year from now below $7.”

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