MANHATTAN, Kan. – Soybean producers may soon find that history isn’t a reliable guide to how low prices can go when stocks build to large levels.

If the weather cooperates, U.S. farmers could harvest a bin-busting and perhaps record-breaking crop this fall, said Kansas State University economist Bill Tierney. But, their government-backed loan program has changed since stocks last swelled to price-threatening heights.

Tierney added that two other factors may also complicate the 2001-02 marketing year’s forecasts:

(1) This spring, world oilseeds traded down to the lowest prices in more than 27 years.

(2) The U.S. economy has entered a slowdown. If severe or long-lasting, it could trigger economic weakness worldwide.

Tierney suspects the U.S. carryover for the next September-August soybean marketing year may only build to about 17 percent of expected use, or some 470 million bushels.

U.S. soybean stocks last set a record high at the end of the 1985-86 marketing year with a 535 million bushel surplus – about 29 percent of the following year’s expected use, he said.

In the 1980s, however, soybean producers could sign up for the government’s old "non-recourse" loan program. That program’s loan rate tended to create an artificial "floor" under market prices.

Today’s soybean Marketing Loan program helps put a "floor" under farmers’ returns. But no one has ever observed what – if any -- effects it has on trade during times of true soybean surplus, said Tierney, who is the grain marketing analyst for K-State Research and Extension.

For almost a decade, world oilseed output and use both have been soaring, he explained.

Over the last two years, however, consumption’s growth has lagged behind production’s, setting the stage for another stocks buildup. The stocks-to-use situation for soybeans – the world’s major oilseed – has been similar.

The combined soybean crops from the United States, Brazil and Argentina posted a 6 percent increase in 2000-01. This equaled about 221 percent of U.S. soybean use for September through February. It also equaled an increase from the previous year’s supply-to-use ratio (215 percent), as well as the long- term average (193) for that period’s stocks disappearance.

Still, Tierney is seeing at least some reason for optimism on every front:

* World oilseed yields set a new record in 2000-01. Oilseed acreage was down 1.5 percent, however, so the result was a 1.2 percent production increase. Over the previous five years, production had jumped 17 percent – an average of close to 6 percent a year.

* Old-crop oilseed consumption rose 2.9 percent in 2000-01, setting another new record at 300.8 million metric tons. The previous eight years totaled a use increase of 32 percent.

* World stocks have been growing since 1996, but are likely to be slightly smaller at the end of the 2000-01 marketing year. And, their stocks-to-use ratio will remain below the 35-year average.

* For the past two years, oilseed users have bought at least 21 percent of their supplies from other countries, setting the highest trade-to-use ratio in 20 years.

* In mid-April, export bookings for U.S. soybeans were record-high and well ahead of the pace needed to meet USDA’s projection for the 2000-01 marketing year. Soybean exports were 5 percent larger than year-earlier levels. (Soyoil exports, on the other hand were down 37 percent from 2000’s and far behind on meeting USDA’s forecast.)

USDA has set the 2001-02 Marketing Loan rate at $5.25.

"With new-crop price offers well below that, producers have little incentive to hedge or forward price this fall’s harvest," Tierney said, "even though prices are likely to decline this summer. So the bid question now seems to be: How low will they go?"