(Bloomberg) Soybeans at $9 to $10 a bushel are a “comfortable” long-term price level that will allow worldwide supply to match demand, said Carl Hausmann, head of global government affairs at Bunge Ltd.

Prices for the oilseed won’t return to the level in the period from 2000 to 2007 of about $5 a bushel other than for “short” periods, he said in an interview at Terrapinn’s Agriculture Outlook conference in London today.

“With the exception of short-term blips, we won’t see those prices again,” Hausmann said. “I’m talking $5 soybeans.

The current level of $9 to $10 is a much more comfortable price longer term, in terms of where the equilibrium is between supply and demand.”

Oilseed prices, adjusted for inflation, will climb between 2010 and 2019 compared with the decade to 2006, because of a growing population and changing diets, the Organization for Economic Cooperation and Development and the United Nation’s Food and Agriculture Organization said in a June 15 report.

“If Brazil were to lose 30 million tons of production, you would see the price spike up next year,” either for soybeans or corn, Hausmann said. “Clearly at $9 a bushel, the marginal producer in Mato Grosso will just make money,” he said.

The Bunge executive said agricultural-commodity prices may climb again, following increases in 2007 and 2008.

Willing Buyers

“Price spikes up are always more violent than dips down,” Hausmann said. “When prices go low enough, you will always find people willing to buy, finance and carry over to next season.”

Increasing soybean production in Brazil and Argentina is boosting food security because a poor harvest in one region can be compensated by higher output in another, he said.

“You will get more food security in an interdependent world,” Hausmann said. “It’s wonderful to have soybeans in the southern hemisphere as well as in the northern hemisphere.

This is reducing weather risk. That’s why it’s interesting for Bunge to be in these different parts of the world.”

Hausmann said he expects a “significant” corn crop in the U.S., the world’s biggest exporter of the grain.

“For corn, we got planted early in the U.S. and the expectation is for a significant crop,” Hausmann said. “The farmer likes today’s prices, which is why he has been planting aggressively. Higher prices will induce a supply response.”

“The U.S. has been losing wheat acres to corn and beans because there is more profitability in corn and beans,”
Hausmann said.

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