Good said that deferred soybean futures prices are lower than nearby prices in anticipation of larger South American and U.S. crops in 2013, but it should be noted that those prices are still higher than the average prices received for the 2010 and 2011 crops. “That is, there is some production risk reflected in the current price structure so that if current expectations materialize, even lower prices should be expected,” Good said. “The immediate focus is on South American weather and production prospects there. For the month of October, much of the central and western portions of the production area in Brazil received less-than-average precipitation while much of Argentina was extremely wet. Not much can be said about 2013 U.S. production prospects at this point. While drought conditions have been alleviated in much of the eastern producing areas, dryness persists in portions of the western Corn Belt and much of the Central Plains,” he said.
“With current unsettled weather conditions and large crops needed in both South America and the U.S. in 2013, the soybean market may be understating production risk. If so, modestly higher prices for the 2013 crop would be expected,” he said.