Modeling Soybean Prices in a Changing Policy Environment

The oilseed products complex is an important component of the U.S. agricultural sector. In 2000, almost 75 million acres were planted to soybeans, representing over 29 percent of total planted acreage, making soybeans second only to corn in terms of acreage (ERS/USDA, 2000). Soybean acreage has increased steadily since 1990, when only 58 million acres were planted. From a historical perspective, soybeans are rather unique in that they were not eligible for target-price deficiency payments nor were they subject to the explicit acreage restrictions of other program crops. However, the acreage-idling and base-acreage requirements, as well as government stock-holding behavior, of other program crops has indirectly affected soybean acreage decisions in the past. Soybeans have been eligible for government price support loans for the past sixty years. In recent years, soybeans have benefited from a high loan rate relative to corn. This, coupled with eligibility for government marketing loan gains and loan deficiency payments, has stimulated production of soybeans.