Well, here we go. Again. It appears we have another week of the unknown ahead of us, which has been a common theme for the past 10 weeks. I’m typing up this piece on Sunday evening, and the latest news has President Trump saying no to the Iranians’ latest peace offer. I suspect there’s a strong chance that this will go on for a while longer, which will certainly have major price implications for the energy sector and thus the soy sector as well.
Since the war began on Feb. 28, the November soybean contract has gone from $11.28 to $12. Most of that gain can be attributed to the sharp rally in diesel but some premium is tied to hope of a favorable outcome from this week’s meeting between Presidents Trump and Xi. I suspect some good things will come out of the meeting but so will some disappointments.
With our soybean export price currently $1 above that of our South American competition, it doesn’t make economic sense for the Chinese to buy any old crop soybeans from us. This past year, they managed to go to the end of the calendar year without buying many beans from us and that could certainly unfold again. The Chinese hog industry and thus their crushing industry have been operating in the red for quite some time, so the timing for them to get excited about paying a premium for our product couldn’t be worse.
Positive demand news: Crush
On the positive side, our domestic crush has shattered records on a monthly basis and that likely will result in another increase in the USDA projection. Given the unknown on Chinese demand, the USDA might be reluctant to adjust their current export usage number before the July report. What we are growing confident of is a looming acreage increase on the June 30 report.
Negative supply potential: Acreage
Our Farmer’s Keeper customer survey last month revealed a heavy lean toward planting fewer corn acres, due in large part to the surge in fertilizer prices since early March. Whether that ultimately means an additional 1- to 3-million soybean acres remains to be seen but unlike last year, that acreage card won’t be played in our favor. At least for soybeans.
An ugly scenario for futures going forward would be a poor outcome from this week’s meeting between Presidents Trump and Xi, followed by a sharp acreage increase on the June 30 report.
If weather conditions are highly favorable going into the August production report, we could be on our way to a repeat of last summer’s price pattern. The summer low for the 2025 November contract was $9.8125 and occurred on Aug. 6. The projected new crop carryout on that day was 310 million bushels (per the July USDA report).
Going into Tuesday’s WASDE report, the trade is expecting a 2026-27 ending carryout of 361 million bushels. While that doesn’t strongly suggest an eventual collapse to last year’s low, it is a reminder that futures tend to fall farther and harder than most of us expect. With the funds currently carrying a massive long position across the entire soy complex, any hard break could be compounded quickly.
Lock in a floor
What we do know for sure is this: The current futures price for the November contract is the highest we’ve seen in almost two years. For most producers, the resulting cash price is above the cost of production. Along with some assistance from revenue protection crop insurance and the options market, a path exists toward locking in a floor on 100% of a producer’s expected production. We didn’t have that opportunity last season, and we still don’t for corn this season. The time is now to take as much risk as possible off the table and that can be done quickly and safely.
Look for a yield bump
In addition to the Chinese and acreage factors, we’re also well past due for a major bump in yield. The 2025 yield record was only a bushel above the previous record from 2016. I believe it’s safe to say that our yield potential has gained well over a bushel in the past 10 years.
If our acreage increases by 2 million and the Chinese don’t make a major move to increase their intake of U.S. soybeans, a national yield above 55 bushels per acre eventually will pull the November futures contract below the $10 mark. That will have a devastating impact on a farm economy that’s teetering on the edge of disaster.