"Prospects for a sharp decline in U.S. soybean stocks by the end of the 2007-08 marketing year suggest that an increase in U.S. soybean production, and therefore acreage, will be required in 2008, said a University of Illinois Extension marketing specialist.

""That perceived need has provided underlying support to soybean prices," said Darrel Good. "Some analysts have already projected a large increase in U.S. soybean acreage in 2008. However, forecasts of the acreage response in the United States before the outcome of the 2008 South American crop is clearer cannot be very accurate.

"While some production decisions have already been made, producers clearly demonstrated the ability for late-season acreage flexibility in 2007 when planted acreage of soybeans was nearly 3.5 million less than intentions reported in March. There does appear to be a bit of a knee-jerk reaction by producers to plan for more soybean acreage in 2008 with November 2008 futures above $9.50. However, December corn futures at $4.25 suggest that corn is still potentially more profitable than soybeans in much of the Midwest."

Good's comments came as he reviewed soybean prices, which moved to the highest level for the current marketing year on the last day of October. November 2007 futures traded to $10.185. November futures have reached a high over $10 only once before, when the 1988 contract traded to a high of $10.46.

The average spot cash price of soybeans in central Illinois reached a high of $9.73 on Oct. 31, well below the recent high of $10.40 established on March 22, 2004. Basis levels continue to strengthen, although basis remains generally weak by historic standards.

"The Illinois River basis strengthened by 43 cents from Oct. 15 through Nov. 2, while the average central Illinois basis strengthened by only 20 cents," said Good. "The average cash price in central Illinois on Nov. 2 was 35-3/4 cents under November futures, compared to the average for the previous four years of 19 cents.

"Future basis strengthening is likely as the marketing year progresses."

The 60-cent rally in soybean futures over the past three weeks has been led by soybean oil prices, he noted. After dipping to about 38 cents in early October, December soybean oil futures moved above 42 cents in early November. December soybean meal futures have been trading between $270 and $280 per ton.