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Favorable Conditions Send Soybean Prices Lower

posted on May 21, 2004


To date, those WTO trade talks have not been fruitful, due in large part to disagreements over domestic farm subsidies. But there has been some movement in recent days that's provided new hope; notably, overtures from the European Union on cutting trade-distorting export subsidies. One former high-ranking WTO official says the world currently has its best chance yet to strike a global trade deal.

What the talks hold for American farmers remains to be seen. But one thing is sure: If and when a trade deal is signed, the U.S. will be among the few crop-exporting nations that are ready and able to meet growing worldwide demand.

Favorable Conditions Send Soybean Prices Lower As the annual rite of spring planting begins to wind down, U.S. farmers continue to sow the seeds at break-neck pace.

According to the Agriculture Department, 92 percent of the nation's corn crop is in the ground. That's more than 15 percentage points higher than the average pace and one of the fastest corn plantings on record.

Spring wheat planting also is rolling right along, with 90 percent of the crop in the ground.

Soybeans, traditionally the last of the major spring crops to be planted, aren't far behind. Nationally, 63 percent of America's soybeans have been planted.... a hefty increase from last week's tally of 36 percent.

Generally favorable conditions are responsible for the rapid pace of planting, and thanks to timely rains in key growing regions; corn, wheat and soybean emergence rates all are well above average.

Prospects for a bumper soybean crop sent nearby futures prices sharply lower again this week. July beans, which posted contract highs of $10.50 per bushel earlier this spring, now are trading closer to 8.50.

Despite potential for a weather rally later this season, some analysts are concerned about the crop's long-term potential. While demand continues to be strong, increased competition from South America poses a serious threat to prices.

Corn prices appear to be a bit more resilient. This year's crop, while off to an excellent start, would have to exceed last year's record harvest before supplies become burdensome. Given the potential for arid conditions this summer, the outlook is bullish for corn.


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