Farm Talk 2 – Soybean Acres

From Successful Farming Magazine, “On Friday, the USDA pegged the U.S. 2017 soybean acreage at 89.5 million acres, above the trade’s expectation of 88.12 million and above last year’s acreage of 83.43. If realized, this year’s soybean plantings would be a new record.” Headline reads, “USDA PEGS U.S. SOYBEAN ACREAGE AT RECORD HIGH”.

This should not surprise anyone that has been following the wheat and corn prices. I always find it interesting to watch the “invisible hand” work its magic in Agriculture. Agriculture is one of the few markets that is purely a competitive market (except for the government subsidies – Think Corn Prices!). Supply and Demand can be seen working in almost every aspect of the Agriculture industry.

As the price of wheat and corn go down, farmers switch their planting decisions to soybeans. With time, soybeans will go down in price due to surplus inventories and the cycle will start all over. Fascinating. On this news, soybean prices were down for the day. May soybean futures closed 17¢ lower at $9.46. November soybean futures finished 8 1/4¢ lower at $9.55.

More about the Invisible Hand Theory: The phrase invisible hand was introduced by Adam Smith in his book ‘The Wealth of Nations’. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest.

I feel like the theory is based on the individual’s desire to maximize his or her own interest. When that happens, everyone benefits. I have always been a fan of Adam Smith’s theory. I love to see it in action. Thank you agriculture. Thank you family. Thank you grocery store. Thank you church. Thank you… I could go on and on but I think my point is made.

What do you think?

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