University of Illinois Ag Economist Darrel Good says the wide soybean price swings reflect ever-changing supply and demand expectations. He says much of the strength in soybean prices during the first three months of this year reflected deteriorating production prospects in South America. USDA is currently projecting production in five South American countries at 4.237-billion bushels. Good notes that’s 15.5-percent smaller than the 2011 harvest and 16.4-percent smaller than the December 2011 forecast. Good says some believe the crop is even smaller. An updated estimate will be released next week. Much of the price weakness in recent weeks – according to Good – reflects growing concerns about the U.S. and world economic and financial conditions and the negative implications for commodity demand. Over the next three months – Good says prospects for the 2012 U.S. crop will be a factor that influences prices.

Good says the Prospective Plantings report released in March revealed producer intentions to plant 1.074-million fewer acres than planted last year. USDA will estimate planted and harvested acreage later this month. According to Good – the strong soybean price rally into planting time suggests acreage may exceed intentions. Unless there’s a big difference from intentions – he says the production focus will be primarily on yield prospects.

As for demand – Good says the pace of exports and export sales will be one of the most important price factors as the world adjusts to the small South American crop and troubling economic conditions. He says export commitments for the current year ending August 31 exceed USDA’s projection of 1.315-billion bushels for the year. Good says sales for delivery during the 2012-13 marketing year had reached 393-million bushels as of May 24 – the most ever for this early in the year. With the small South American harvest and the strong pace of export sales – Good says soybean prices will likely be sensitive to U.S. production prospects. He believes substantial price swings are likely to continue – providing producers with opportunities for additional sales of the 2012 crop.