Economic and Marketing INFORMATION
FOR
INDIANA
FARMERS
Prepared by Members of the Agricultural Staff of Purdue University, Lafayette, Indiana, September 20, 1955.
The 1955 Soybean Outlook
By
W. S.  FARRIS, N. S. HADLEY, and J. B. KOHLMEYER
Agricultural Economics
THE PRICE of soybeans during
the 1955-56 marketing year is
expected to average slightly above
the loan rate of $2.04 per bushel.
Prices are expected to be slightly below the loan rate at harvest($1.85-
$1.95). They are expected to rise
modestly above the loan rate by next
summer, probably to the $2.20-$2.35
level. Storage of the 1955 crop will
likely be profitable if the price at
harvest is below the $1.85-$ 1.95
level.
The Situation
The production of soybeans in the
United States was estimated on September 1 to be about 388 million
bushels. This crop would be the
largest on record and is 13 percent
larger than the production of 343
million bushels last year. The carryover of 1954-crop soybeans is estimated to be 10-1,1 million bushels on
October 1.
Cottonseed production is expected
to be about 6 percent less than last
year. However, the larger estimated
production of other oil-bearing crops
will result in a 12 percent increase in
the production of the four major
oilseeds this year (Table 1).
Table 1. U. S. Oilseed   Production
Cr*
Soybeans
Cottonseed
flaxseed
Peanuts
Estimated (Sept. 1)   Percent
1954 1955 Change
TOTALS 35,527
Million Pounds
20,280 23,280
11,404 10,754
2,520 2,580
1,023 1,689
38,303
Percent
+ 13
- 6
+ 3
+ 65
+~T~
on
Carryover stocks of fats and oils or
October 1 will be considerably smaller than the past two years, resulting
'Tom an increased export demand and
a high domestic utilization rate. With
soybean prices near or below the support price, strong export and domestic demand will probably continue.
Expected   Prices
The announced average support
price for the 1955 crop of soybeans
is $2.04 per bushel. This price represents 70 percent of the February
15 parity price which was the most
recent parity price available when
the announcement was made. Support prices for individual Indiana
counties may differ from the average
support price by a few cents. Any
producer of soybeans this year is
eligible to participate in the price
support program. However, the producer must arrange for satisfactory
storage and the soybeans must grade
No. 4 or better.
Considering the various factors affecting the price of soybeans, the
average price for the 1955-56 marketing year is forecast to be near the
support price. However, because a
large part of the soybean crop is
marketed at harvest (usually more
than 50 percent in October) prices
may fluctuate between $1.85-$1.95
per bushel during the harvest period.
The demand for export and domestic
use is expected to be strong enough
to make probable a price increase as
the season progresses up to $2.20-
$2.35  per bushel.
Storage Considerations
In deciding whether to store soybeans or sell them at harvest, the
farmer must consider his costs of
storage as well as probable price
increases during the storage period.
The cost of storing a bushel of soy
beans for five months (exclusive of
taxes) is approximately 14 cents
(4 cents fixed costs; 10 cents variable costs). This assumes that the
soybeans are valued at $2.00 per
bushel and that they are sold before
March 1. If storage space is available then the 4 cents fixed costs has
already been incurred.
The above average costs are calculated as follows:
Cost    Item
Cents per
Bushel
Fixed cost
New storage 4
Variable cost
Interest
($2.00 for 5  months   @   5  percent) 4
Extra   handling 3
Losses   (1   percent) 2
Insurance   ($ .40   per   $100) 0.8
About 4 cents per bushel for property taxes should be added to the
above costs if soybeans are on hand
March 1. (For example, assume that
the property tax rate is $3.14 per
$100 valuation with soybeans valued
at 70 percent of $2.00 per bushel.
Then $2.00 X .70 X .0314 = $ .044
per bushel.
Tax rates, assessment ratios and
other costs vary in different localities. Also if the price support program is complied with, other charges
may be incurred. (For example, the
charge for arranging a loan is 1
cent per bushel and the charge for arranging a purchase agreement is
one-half cent per bushel. Delivery
charges for soybeans under one of
the support arrangements may
amount to an additional 5 cents per
bushel.)
Each farmer should, therefore, determine his individual storage costs
to use in arriving at a decision on
whether to store soybeans. As a general guide, however, soybean producers   may  find  storage   profitable   if