Strong demand helps push soybean prices up (2024)

Demand for U.S. soybeans remained strong through the end of 2022 and that’s helped to push prices higher as the new year was just beginning.

“Soybeans has been the market that’s been able to push (prices) pretty good,” said Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D. “The big thing about soybeans that’s interesting is that demand continues to be strong.”

As of the first week in January, exports had been moving along at a decent pace in recent weeks. Though they haven’t been stellar, they have been good. Martinson pointed out that China and unknown destinations have been buying and there’s been a good amount of product movement.

He also noted that at the end of the year soybean prices went up and closed a gap that was created on June 21 when prices were up in the $15.40-$15.50 area.

“So now, with that gap being closed, technically we open ourselves up to make a run for the contract high, which is right up at the $15.72 area,” he said. “Soybeans right now are going to open themselves up to be able to test that area if we can continue to see decent demand.”

Local prices have been “pretty good” of late. At one elevator in western Minnesota regularly followed in this column, as of Jan. 3, the January delivery price was $14.89 per bushel and basis was -35 cents under. The September 2023 futures price was listed at $14.17 and basis was +1 cent over.

“I’ve seen a lot of $14.99 prices being quoted for soybeans, so we're flirting with that $15 level, and there are some pretty strong cash bids being offered,” he said. It’s a contrast to 2-4 years ago when prices languished in the $7-$8 range. “It shows how volatile the market is. We left 2022 with a pretty volatile market and I expect at least the first half of 2023 is going to be the same kind of volatility.”

Looking ahead, Martinson said the biggest concern for soybeans is Argentina’s declining soybean production due to drought conditions.

“Right now, it’s looking like they’re going to continue to see some major cuts and it’s likely that they’re not going to get all their acres planted because of how dry it is,” he said.

“What’s significant there is that it will bring in soybean meal and soybean oil demand to the U.S. as Argentina’s a big exporter of both those products and there is really nobody else that is a big exporter of soybean meal and soybean oil,” he continued. “So that will bring that demand back to the U.S. and help increase our exports. That’s helped soybean meal prices rally up over $20 this last week, as well.”

While Argentina’s soybean crop continues to decline, as do estimates, Brazil is still anticipating a big crop that will offset some of South America’s drop in Argentina.

“That will start to take away our market, but not until the end of January, middle of February, so we will have that long to hold on to our demand,” he said.

And while that demand remains strong and prices are in the upper range, there are some marketing opportunities for soybean producers until Brazil’s crop enters the market.

“I definitely think we need to take advantage of marketing some old crop, get caught up on sales,” Martinson said. “I wouldn’t sell everything because we have a little opportunity. I’d want to have a majority of my soybeans sold or in position to get sold. I think by the time we get into the end of January, the first week of February, we’re likely going to want to be sold out of soybeans just because then we should start to see our exports slip over to Brazil. That will kind of stagnate our market.”

And just like in corn, basis continues to be strong for soybeans largely due to being unable to move product because of the winter storms. Plus there will be more crush plants coming online in the next three years, so basis levels will likely continue to be fairly strong going forward.

“But I’d be careful on pricing new crop. I would price futures. I would leave basis open because if these plants do get built, that is going to increase our demand and should help our basis,” he said.

Martinson noted that it looks like one new crush plant a year will come online for the next three years. One in Jamestown, N.D., is expected to be up and buying grain by fall of 2023. The next fall (2024), another one in Casselton, N.D., is expected to be buying grain, and in the fall of 2025, another in Grand Forks, N.D., is expected to be buying grain.

Opening these plants will help influence the market, but it will also have an impact on other grain commodities, namely corn and wheat, as they compete for acres.

North Dakota, he explained, produces about 200 million bushels of soybeans a year on average and these plants are going to take about 135-145 million bushels of those.

“Right now, we have enough acres, but it will increase acres just because that will put a strain on any bushels that are going to be available to be used for the export market,” he said. “It will have a big impact on wheat and corn acres because they will all be competitors. Then we’re going to start to see again this balance for acres switch, and try to figure out what the correct mix of acres is going to be.”