AUBURN, IOWA. There's no place Jeff Frank would rather be than on the cutting edge of soybean production, regardless of commodity prices. In fact, he believes it's when prices are low that technology is most likely to make up for market shortfalls. The key is yield.
"I know we all talk about cutting costs, but I think about the fact that not everyone will do that," he says. "What happens is you reduce your yield because you cut back on fertilizer or your herbicide program, and now you are automatically on the short end of the stick. We are in an era where yield seems to be the only way to make the math work."
Frank says this season's soybean crop saw a slow start, but yields on their farm ended up averaging around 65 bushels per acre. Sales opportunities, however, have been fleeting.
"We sold some $9 beans earlier in the year on new crop," Frank says. "That was a hard decision to make. Will the market go up? You have to have a plan so you aren't just hanging there. If you can see a decent profit, enough to hold things together, you need to cover your costs. But, I always say you need to hold some, too, in case the market goes up. In this market, it's pretty easy to get hung out to dry."
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Farming since 1977, Frank believes markets are significantly more volatile than they once were. That makes decisions to sell or hold especially challenging.
"Back when I started farming, if the market moved 40 cents in a year, that was a big swing. Now, it can move that much in a day. It's hard to play that game."
Increasingly, he notes, diversification is a way to help farmers work through the down markets.
"No matter what you diversify in, you should have more than one thing to rely on. That can be the difference," says Frank, who produces corn as well as soybeans. The Iowa Soybean Association board member adds he believes there are opportunities ahead on the trade side but notes it may take time.
"I do believe we are creating new markets for our product," he says. "I think the European market has a lot of promise. We have become too reliant on China. That said, I hope we can see our trade with them restored as we move into 2020. That would potentially be a game changer for this market."
Frank says he needs to see soybeans at that $9-and-above mark to start to feel he's meeting costs and building in some level of profit.
"I don't believe you get there by cutting back, either. You have to farm for everything you can all the time."
Soybean Outlook 2020 from DTN Analyst Todd Hultman:
> SIDEWAYS MARKET
The smallest soybean planting in eight years has helped soybean prices hold sideways in 2019. This is no small achievement for a U.S. market that lost over 400 million bushels (mb) of exports in 2018-19 to the trade dispute with China.
> SUPPLY LEVELS GET LEAN
The 2019 U.S. soybean crop is estimated to be 900 million bushels smaller than the 2018 crop as the season wraps up. This means world-ending soybean supplies will be significantly leaner than what the markets expected earlier this year. The soybean price outlook is muddied by the uncertainty of trade with China, but even if the current trade status doesn't change, July 2020 soybeans could retest the 2019 high of $9.70.
> OPPORTUNITY TO TIME THE MARKET
The most likely scenario at this point, when it comes to timing on the market, is that this high in the soybean market hits in late June. That is typical of the soybean cycle. However, there is a chance the market's old high price could be tested earlier with help from adverse weather in South America.
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