A Steep Soybean Price Decline Expected

May 17, 1999

USDA looks for a sharp decline in soybean prices for the coming marketing season but that should help domestic demand and exports increase. The global oilseed crop should be a record in 1999-2000.

A soybean surplus will "considerably depress" 1999-2000 prices, according to USDA. "Under similar circumstances in the past, the soybean loan rate would provide an effective floor for U.S. farm prices," the report continues. In 1985-86 the loan rate was $5.02 per bushel with a season average price of $5.05.

"But this situation no longer applies now that the soybean marketing loan allows the market to clear at a price below the loan rate," says USDA. For 1999-2000 the farm price should average $3.95-4.75 per bushel compared with $5.05 for 1998-99. Prices this fall could be the lowest since 1972.

Farmers should be able to redeem loans at the posted country price, then receive the county loan rate based on the $5.26 per bushel national average. Loan deficiency payment rates likely will be close to $1 per bushel, giving $2-3 billion in farm income support in 1999-2000 just for soybeans.