Soybean purchases by China, the world's largest soy buyer, were up 26 percent in March to 4.8 million tons, up from 3.83 million tons in February. When combined with reduced soybean production forecasts from South America, the developments are setting up a new crop market dynamic.

“We are looking at a situation where soybeans, rather than corn, could very well become the market leader in the U.S. grain and oilseed complex,” according to American Farm Bureau Federation (AFBF) economist Todd Davis.“Typically, corn prices help drive the market prices for the other grain and oilseed commodities, but given what we now know, soybeans are ready to move to the forefront.”

Soybean supplies are likely to move lower as 2012 U.S. soybean plantings are expected to decline by more than a million acres compared to 2011, according to AFBF. Complicating the picture has been the drought that has already cut into South American beans.

The Argentina and Brazilian soybean crop soybean crop estimates have has been reduced by 257 million bushels and 330 million bushels, respectively, from November estimates. “Because of the sizable production setbacks this crop year, world soybean production is headed toward 8.8 billion bushels, a year-over-year setback of 900 million bushels,” says Bill Nelson, Doane soybean analyst. “That is the largest decline on record.”

CBOT soybeans for May delivery added 0.35 percent to $14.27 a bushel Thursday, back to levels seen before profit taking by investors on Tuesday and Wednesday, according to a Reuters report. Soybeans are the star performer on the CBOT for the year, having gained some 18 percent, while corn has dropped 2.6 percent.

Global soybean consumers would be much more comfortable if world soybean production and stocks increased. “The U.S. won’t make a dent in that goal if planted acres decline by one million from last year,” adds Nelson. “Soybean markets must send a signal to South American farmers to expand plantings late this year, which would be price supportive for soybeans for many months.”