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Soybeans seeing dramatic upturn due to 'old-fashioned supply and demand,' South Dakota official says

Crop boasts highest prices since June

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A farmer harvests a field of beans this past November Northeast of Mitchell.
Matt Gade / Mitchell Republic
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Producers around the country are seeing soybeans rise in their per-bushel price to their highest levels since June of 2021.

“I can say what we have seen in the past few months is that we’ve taken a dramatic upturn in soybean prices,” said Kevin Deinert, a farmer from Mount Vernon who also serves as the first vice president of the South Dakota Soybean Association board of directors.

The per-bushel price of soybeans is currently right around $15, a considerable jump from a recent low of $11.89 in November. Soybean prices have not been this high since June, though it has a way to go before it reaches the most recent high of the past year, which was about $16.43 in May.

As of Wednesday, Feb. 2, local prices for soybeans in the Mitchell area were listed at about $15.01.

Deinert said, for the most part, the increase in price comes down to old fashioned supply and demand. Demand is certainly up, and some weather factors, such as a dry spell in some parts of South America, have impacted some international supplies of the commodity.

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“There are a variety of factors that contribute. (There is a high demand for) food-grade soybeans and soybean oil and for domestic use for livestock both here and abroad,” Deinert said. “And it’s dry down south, which has contributed to some shortage of their soybean crop.”

According to a United States Department of Agriculture report for January of 2022 , Brazil soybean production for marketing year 2021/22 was estimated at a record 139.0 million metric tons, down 3% from last month, but up 1% from last season’s record crop.

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Soybean prices are on the rise.
Matt Gade / Mitchell Republic

Harvested area is estimated at a record 40.4 million hectares, up 4% from last season’s record area. Yield is estimated at 3.44 tons per hectare, 3% below last month and last season. The decrease is attributed to historic dry conditions during November and December during critical reproductive crop stages in the southern state of Paraná.

Deinert said prices have slowly been on the rise since the bottom fell out of prices with the arrival of the COVID-19 pandemic. Since then, producers have expected slight upswings in prices, but the recent trend is taking some by surprise.

“Overall the supply is tight, and a whirlwind of factors have all contributed to higher prices,” Deinert said. “But I’m not sure we could have expected this level of prices. From a local perspective, we kind of anticipated a little bounce, but I don’t know that anyone could have accurately forecast this kind of boost.”

Deinert said when the pandemic first hit there were a lot of producers who sold off stockpiles of soybeans. But as the world has slowly adjusted to and rose out of the deepest depths of the outbreak, where lockdowns and public events were regularly canceled or postponed, demand for soybean-based products and materials has slowly been on the rise again.

Prices hit a low of around $8.32 about the time the pandemic was taking hold in early 2020.

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Beans are harvested this past September.
Agweek file photo

“When you think about when the pandemic first hit, we saw a lot of sell-offs in the market. If you look back in early 2020 when the pandemic first arrived, we hit some low prices, and since then we’ve trickled upward as we knew we were coming off some high-usage feed years,” Deinert said. “(As the pandemic came more under control) people were getting back out and about, and soybeans are used in a lot of products.”

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The increase in prices provides a boost to producers who are dealing with rising input costs on items such as machinery and fertilizer, essential components to a successful planting and harvest season.

“If producers have crop left to sell and are fortunate enough to produce a decent crop, looking at the prices now, these are the highest prices we have had in a long time. We can be profitable when inputs start to climb. Machinery and chemicals are creeping up in price, so (with prices on the rise) we can have profitable levels and reinvest in our farms,” Deinert said.

Deinert said it was unlikely that significant jumps in soybean prices would affect consumers or the cost of products that use soybean materials. Price increases on the shelf stem from more factors than just the price of soybeans.

“Live everything else this year, inflation and the markets will drive everything up, whether that be from commodity prices, input prices or from a manufacturing standpoint. As farmers, we’re not privy to how manufacturers decide their prices, but at least we can present a good product to the public,” Deinert said.

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A field of beans are harvested this past November Northeast of Mitchell.
Matt Gade / Mitchell Republic

Of course, some trends simply cannot be predicted. But for the near future, Deinert said producers would continue to keep an eye on what’s going on locally, regionally, nationally and internationally.

“We’ll continue to watch how global markets react. Just like the stock market, the food sector or commodity sector gets touchy with geopolitical events. We’re keeping an eye on how inflation affects everything, and we hope we don’t have any major downturns that would negatively impact the farmer sector,” Deinert said.

Corn

Corn prices have seen a similar, though less spectacular rise recently.

Current prices put corn at about $6.35 per bushel, also the highest it has been since June. Scott Stahl, who farms near Bridgewater and serves as president of South Dakota Corn Growers Association, said it has been encouraging to see those prices on the rise.

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He attributed the rise to continued demand for corn-based products from sectors like the ethanol industry and the livestock industry.

“We definitely have seen prices appreciate over the last year thanks to strong demand,” Stahl said. “The ethanol industry is performing really well, and our partners in the livestock industry remain strong.”

Like soybeans, corn prices took a hit when the pandemic took hold, with prices hitting a low of around $3 per bushel in August of 2020. The uncertainty brought on by COVID-19 depressed prices across the board, extending past just the agriculture markets, Stahl said.

“Anytime there is uncertainty, and COVID-19 caused extreme uncertainty in markets worldwide, the uncertainty is going to depress the price of commodities. That’s what we’ve been facing for going on two years next month,” Stahl said. “Part of what happened during COVID-19 was people weren’t driving. That created a backlog and oversupply of ethanol which hurt the corn market. It just affected every part of everybody’s lives, and farmers weren’t spared from that.”

Stahl said there is no crystal ball for charting the path of where prices will go in the future, though there are certain factors to look for. The number of acres planted in the spring and moisture levels can affect prices, and there’s no telling what the weather will hold before then.

But for now, he said corn producers will keep an eye on their bottom line and balancing it with those rising input costs.

“Farmers are really good at sharpening their pencil and making sure there’s a profit at the end of the day. There is inflation in corn and bean prices, but also in our inputs. Diesel fuel, propane, chemicals - fertilizer especially,” Stahl said. “It’s a moving target all the time.”

Related Topics: SOYBEANSCORNMARKETS
Erik Kaufman joined the Mitchell Republic in July of 2019 as an education and features reporter. He grew up in Freeman, S.D., graduating from Freeman High School. He graduated from the University of South Dakota in 1999 with a major in English and a minor in computer science. He can be reached at ekaufman@mitchellrepublic.com.
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