(Photo credit: Iowa Soybean Association)

The ‘perfect storm’ behind the market

May 27, 2021 | Joseph Hopper

In 2021 soybean prices rose to the highest in years. A long string of events from 2018 onward including volatile international trade relations, weakness of currencies, African swine fever and COVID-19 created the perfect storm for the current ’21 market conditions, according to AgYield Senior Strategist Dustin Johnson, one of the panelists of the Peoples Company “Big Questions in Land Management” webinar conducted in May.

“Non-U.S. producers are about a 30% increase in total production (compared to 2012-2014), that goes for both corn and beans,” Johnson said. “(South America has) really surprised us on how far they’ve caught up on production for soybeans.”

Iowa Soybean Association farmer member Klint Bissell says while he does not know if the soybean market has hit its price ceiling yet, he’s glad market unpredictability has mellowed.

“The way the markets have acted it at least gives you a direction, before we were just kind of chasing it (higher prices); you didn’t know how high it was going to go,” Bissell says. “We were doing some of our marketing in increments, stair stepping it up because we didn’t know where to think it was going to be going and now at least it’s kind of giving you, maybe, at least somewhat of a top.”

Meanwhile, Bissell is curious about old-crop sales.

“I don’t know what to think on the old-crop stuff, they keep acting like we’re going to run out of beans.”

(Pictured) ISA Communications Squad member Klint Bissell (Photo credit: Iowa Soybean Association)

Paraphrasing USDA reports, Johnson said the expectation is crush will continue to “work on all cylinders” and while some are cautious as fears about inflation continue, it’s not yet as high as feared. The senior strategist said prices for corn, soybeans and wheat today mirror a few other sharp spikes seen in the past, explaining record highs previously seen usually didn’t stick around in the long-term.

“I do think that it’s not just about inflation, there’s a true supply disruption right now that’s why we’re experiencing the bull market we’re experiencing today,” Johnson said.

Watch the recorded webinar in its entirety.