The market is sending signals: Plant more corn and less soybeans this year. This is due in part to the projected growth of soybean ending stocks and the decline in corn ending stocks for the 2024-25 marketing year.
Nick Piggott, North Carolina State University Extension grain marketing specialist, points out that larger ending stocks of soybeans globally and domestically are the primary driver for lower soybean prices across the board. He said it is supply and demand. With plenty of beans worldwide, there is resistance to higher prices.
In a presentation to the North Carolina Soybean School Jan. 30, Piggott said it is important to remember that soybean acres were up in 2024 compared to 2023.
Yields were favorable, so ending soybean stocks are projected to move up for 2024-25. Ending stocks of soybeans were up 11% in 2024-25 from 2023-24, compared to a decline of 13% for corn ending stocks.
“We have a reasonable pile to start with, then we plant more acres, then we have a good yield, supply went up 6%. Despite soybean crushing at record levels up 5%, and exports were up 7%, demand wasn’t enough to meet all we produced, so we ended up increasing ending stocks by 11%, and that’s why we see prices down 17% compared to 2023-24,” Piggott said.
Piggott explained that corn and soybeans are bidding for acreage, particularly in the Midwest, where marginal acres compete between the two commodities.
Now, the market is calling for more corn acres and fewer soybean acres due to the decline in corn ending stocks and the increase in soybean ending stocks. He said to keep a close watch on USDA’s March 31 planting intentions report to see where the market is headed.
“If the market says, ‘yes we are going to continue to plant more beans and less corn like 2024,’ that’s going to put even more pressure on soybean prices. We want that report to say we are going to be planting more corn and less soybeans, to be supportive of soybean prices,” Piggott said.
Piggott said it is important to understand the concept of demand rationing. He noted that when demand is stronger than supply, the only way to ration demand is for prices to go up. When prices go up, farmers produce more, and this was the case in 2019.
“In 2019, when soybeans were relatively cheap, we had strong export demand to China for soybeans, and at the same time, we had robust demand for soybean oil for biofuels and soybean meal. Demand was outstripping supply, and stocks were run down, so the market did demand rationing,” Piggott said.
Come 2021, the U.S. ending soybean stocks were at 274 million bushels. Piggott noted that the market is not comfortable with ending stocks that low, so even more demand rationing occurred. Soybean prices climbed to $14.20 per bushel in 2022, and demand for soybeans remained strong.
In 2023, U.S. ending soybean stocks climbed to 342 million bushels, which helped lower prices. Piggott said ending stocks need to be drawn down to support higher prices. He said the challenge is that ending stocks are also up in Argentina and Brazil, which, along with the United States, are the big three soybean-producing countries. Piggott says global U.S. ending stocks are up 14%.
“Even though we have plenty of beans left in the U.S., so does the rest of the world, so we are not going to export our way out of this because all of the other suppliers have beans as well. There is a lot of downward pressure on prices,” he said.
“Employ a dollar cost averaging approach to marketing, selling, and contracting soybeans when it is profitable on upswings by selling production in several lots (say 20-25% at a time).”
