Soybean prices closed down .37% for the week, for the week, November beans were down 50 1/4 cents. On Friday spillover strength from corn and wheat lent some support, although more forecasted rains applied downward pressure. China continues to regularly draw down its imported soybean stockpile in an attempt to boost local supplies and tamp down high prices. Brazil is forecast to have a bumper crop this coming season that will help partially cover any production shortfall in Southern Brazil.
Falling prices for crops could add to hopes that inflation could ease with optimism already there after this week’s CPI and PPI reports for July. World food prices have already declined by the most since 2008 this past July.
USDA’s release last month of the June 30 Acreage report had USDA took off 2.6 million acres from the March 31 soybean planting estimate, dropping it to 88.3 million acres. There is still deep concern is soaring fertilizer prices due to the war in Ukraine restricting the bullish production forecasts from major South American producers Brazil, Argentina, and Paraguay.
Soybeans Futures Highlights
- September futures dropped 4.75 cents to $14.9075, while November futures picked up a penny to $14.0625.
- Soybean basis bids were mostly steady across the central U.S. on Friday but did slide a penny lower at an Ohio elevator today. Farmer sales have been generally sluggish this week.
- Commitment of Traders data showed managed money firms added new shorts through the week of 8/16. That reduced the group’s net long by 2,173 contracts to 99,336.
- Preliminary volume estimates were for 92,306 contracts, fading moderately below Thursday’s final count of 122,424.
Soybeans Technical Outlook
Soybeans held the top of the cloud for a triple bottom sending it sharply higher to the breakdown and to close right under the tenkan and Kijun and over the the 50 wma. Support at the Cloud just over the 6/8 and the January breakup. On the way down soybeans rejected the Kijun and channel retest to spit back the 50wma. The weekly cloud and Murray mingle around the $14.6/bushel benchmark are massive.
Recall beans broke down from the bull pennant framed by +4/8 and +1/8 with the Kijun unable to sustain support right at the breakout. Support at the 50wma gave way to under the futures pivot at $15/bushel benchmarks and at the close of the week was a magnet to the recovery bounce. Pressure came from futures spitting the Weekly +4/8 over $17.50/bushel three times. The market needs to rebalance that energy.
August USDA WASDE Soybean report
USDA presented its first survey-based soybean yield forecast in this month’s WASDE report, pegging average yields at 51.9 bushels per acre. That was a monthly increase of 0.4 bpa. Analysts were expecting to see a 0.4 bpa decrease, in contrast. Production potential moved 26 million bushels higher to 4.53 billion bushels, with USDA explaining that higher yields more than offset lower harvested area.
Soybean USDA June 30 Acreage Report Highlights
Combined corn and soybean acreage fell 2.2 million acres lower than the earlier Prospective Planting estimates.
USDA took off 2.6 million acres from the March 31 soybean planting estimate, dropping it to 88.3 million acres. It now trails 2017 (90.2M ac.) and 2018 (89.2M ac.) as the third largest U.S. soybean crop on record.
The results for soybeans and wheat hinted at smaller than expected demand usage rates between March 1, 2022 and June 1, 2022.
Estimated soybean plantings increased 1% from a year ago, with 88.3 million acres this season. Analysts were much more bullish in their expectations, offering an average trade guess of 90.446 million acres prior to today’s report. USDA’s March estimates were also more aggressive, when the agency pegged the 2022 footprint at 90.955 million acres. USDA notes that planted acres are steady or higher in 24 out of 29 states.
South American Production Estimates
- USDA’s new South American production estimates for 2021/22 firmed.
- Brazilian production increased to 4.629 billion bushels,
- Argentine production increased to 1.595 billion bushels.
Brazil
Brazil is the world’s largest producer of Soybeans and imports 85% of its fertilizers, mostly from Russia. The recent WASDE report cited strong export sales and a reduced export forecast for Brazil.
Brazil is likely to have a bumper crop this coming season, even if weather is uncooperative, according to Matthew Kruse, president of Commstock Investments. “The odds favor a larger crop in Brazil simply because they will be starting with 4+ million more acres than last season,” he notes. “That will help partially cover any production shortfall in Southern Brazil.”
Argentina
Argentina has exported 1.4 MMT of soybean meal so far this month which puts the country on pace to ship 2.2 MMT. This is 400 K below both last month and a year ago.
The Argentine Agriculture Ministry reports producer sales of the 20/21 soybean harvest total 20.4 MMT as of mid-July, down 19% versus a year ago.
China
China’s agriculture ministry reduced its estimates for the country’s 2021/22 soybean imports by 2.1% to 3.344 billion bushels, citing lower demand amid hog herd losses. If realized, soybean imports will be down 8.8% from a year ago. Brazil and the United States are by far the top two suppliers.
China will again auction another 18.4 million bushels of its state imported soybean reserves on August 26. The country continues to regularly draw down its imported soybean stockpile in an attempt to boost local supplies and tamp down high prices.
Soybean Exports
The 2022/23 marketing year for corn and soybeans is right around the corner, starting on September 1. “There is a lot of optimism for the 2022/23 soybean export season,” according to Farm Futures grain market analyst Jacqueline Holland. “In early August 2022, outstanding export orders for the 2022/23 marketing year stood at 578.4 million bushels, over 1.3 times higher than the same time a year ago.”
EU Imports
The EU’s June crush volume fell 12% to the lowest level this year with 13% fewer soybeans at 1.2 MMT processed.
European Union soybean imports during the 2021/22 marketing year have reached 518.8 million bushels through June 19, which is slightly below last year’s pace so far. EU soymeal imports are also lower year-over-year, with 16.04 million metric tons.
USDA-ERS Report
Last month the USDA-ERS report shows soybean exports for fiscal year 2022 are now valued at $32.3 billion, with higher volumes more than offsetting lower unit values. This is a $1.0 billion from USDA’s prior February forecast and would be a record.
According to the U.S. Agricultural Export Development Council, a new study confirms USDA-Foreign Agricultural Service export market development programs boosted ag exports by an average of $9.6 billion annually from 1977 to 2019, representing 13.7% of total ag export value, and returning $24.50 in additional net export revenue for every dollar spent on export promotion.
The study was commissioned by the U.S. Grains Council on behalf of members of the U.S. Agricultural Export Development Council to evaluate USDA’s Market Access Program and Foreign Market Development program. MAP and FMD, which are authorized by the farm bill, are vital to providing opportunities to develop or grow demand for U.S. products in foreign markets.
Developed by IHS Markit in cooperation with Dr. Gary Williams and Dr. Oral Capps at Texas A&M University, both experts on evaluating the economic performance of trade promotion programs, the study updated a 2016 edition also evaluating MAP and FMD, which are currently authorized by the 2018 Farm Bill. The new study also took a first look at the impact of investments through the Agricultural Trade Promotion (ATP) program.
According to the U.S. Agricultural Export Development Council, a new study confirms USDA-Foreign Agricultural Service export market development programs boosted ag exports by an average of $9.6 billion annually from 1977 to 2019, representing 13.7% of total ag export value, and returning $24.50 in additional net export revenue for every dollar spent on export promotion.
The study was commissioned by the U.S. Grains Council on behalf of members of the U.S. Agricultural Export Development Council to evaluate USDA’s Market Access Program and Foreign Market Development program. MAP and FMD, which are authorized by the farm bill, are vital to providing opportunities to develop or grow demand for U.S. products in foreign markets.
Ryan LeGrand, USGC and CEO, says USGC was glad to lead in this effort to demonstrate the long-term impact of the market export programs. “We know from our history that our work helps, as our mission says, improve lives. This study helps us put numbers to those outcomes for our organization and our whole sector within the agriculture industry,” he says.
Developed by IHS Markit in cooperation with Dr. Gary Williams and Dr. Oral Capps at Texas A&M University, both experts on evaluating the economic performance of trade promotion programs, the study updated a 2016 edition also evaluating MAP and FMD, which are currently authorized by the 2018 Farm Bill. The new study also took a first look at the impact of investments through the Agricultural Trade Promotion (ATP) program.
“Our work indicated that MAP and FMD have accounted for 13.7%, or almost $648 billion, of all the revenue generated by U.S. agricultural exports between 1977 and 2019,” says Williams. “The additional export revenue bolsters the entire U.S agricultural sector and creates a multiplier effect throughout the U.S. economy.”
Effect of Higher Input Costs on Farmers
A recent report by the Agricultural and Food Policy Center (AFPC) at Texas A&M University shows higher input prices are having a larger impact on farmers than originally thought.
- Net cash farm income on the representative feed grain and oilseed farms is projected to decline by an average of $534,000 from 2021 to 2022 across the 25 feed grain and oilseed farms.
- Representative wheat farms face an average reduction in net cash farm income of $399,000.
- Representative cotton farms face an average reduction in net cash farm income of $716,000.
- Rice farms face the largest reduction in net cash farm income per farm at $880,000 and a per acre reduction of $442.
Compiled by Joe Outlaw, Ph.D., and Bart Fischer, Ph.D., co-directors of the AFPC.
COT on Commodities
- Weekly CoT data showed managed money firms added new shorts through the week of 8/16. That reduced the group’s net long by 2,173 contracts to 99,336.
- Commercial bean hedgers added 13k new long hedges taking their net short down to 137,396 contracts.
- Spec traders added more meal longs than shorts for a net 1,882 contract stronger net long of 86,264 contracts as of 8/16.
- In soy oil, the funds were 11,025 contracts more net long wk/wk to 33,235 contracts via rotation from short to long.
Commodity Round Up
Highlights
- The Bloomberg Commodities Index declined 0.7% (up 23.3% y-t-d).
- Spot Gold dropped 3.1% to $1,747 (down 4.5%).
- Silver sank 8.5% to $19.05 (down 18.3%).
- WTI crude declined $1.32 to $90.77 (up 21%).
- Gasoline dipped 0.9% (up 35%)
- Natural Gas jumped 6.5% to $9.34 (up 150%).
- Copper was little changed (down 18%).
- Wheat dropped 6.3% (unchanged),
- Corn fell 3.0% (up 5%).
- Bitcoin sank $2,880, or 11.9%, this week to $21,280 (down 54%).
Source: USDA, Farm Progress
From The TradersCommunity Research Desk