Soybean futures recovered some of the heavy selling on Friday after prices fell to their lowest since late July Thursday. November futures added 7.75 cents to $13.6575, with January futures up 6.5 cents to $13.77. Uncertainty about soybean purchases by China, the world’s largest buyer of soybeans, kept prices in check. China continues to sell part of its state imported soybean reserves and has been routinely selling throughout the year to keep local supplies boosted and cool high prices. Weather patterns in Brazil and Argentina will be critical over the coming weeks for their soybean crops.
On Thursday, commodity funds were net buyers of soyoil (+1,500) contracts but were net sellers of corn (-8,000), soybeans (-5,000), soymeal (-2,250) and CBOT wheat (-7,000).
Soybeans Futures Highlights
- Soybean futures front month closed the Friday session with 6 to 9 cent gains.
- November closed the week as a 2 1/4 cent gain.
- Soybeans have a 12 1/4 cent carry from Nov to Jan, another 9 3/4 cent carry from Jan to Mar, which has an 8 1/4 cent carry to May and July was 5 cents above May.
- The November-to-November spread had tightened to just 11 1/4 cents at the close on Friday.
- Soymeal futures were 1.43% to 1.9% higher Friday. The December contract ended the week with a 0.5% loss.
- Soybean oil futures closed Friday18 to 58 points higher in the front months, with Dec up 504 points (8.2%) from Friday to Friday.
- B100 biodiesel prices from USDA’s weekly update averaged $6.38/gal in MN, UNCH from last week.
- Preliminary volume estimates were for 250,594 contracts, moving moderately above Thursday’s final count of 205,039.
Soybeans Technical Outlook
Soybeans rejected the 50 wma to close near the lows for the week and at the bottom channel after it was rejected harshly at the tenkan, under the Kijun finding support at 6/8. Rejection at the Cloud base, and we sit near the January breakup. 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.
FAO World Food Price Index Fell in August for Fifth Consecutive Month
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 August.
Food prices have reversed sharply after being almost vertical for the past year, world food prices as measured by the FAO Food Price Index fell for the fifth consecutive month in August. The index was down 2.7 points (1.9%) from July, however remained 10.1 points (7.9%) above its value a year ago. At 138.0 the index is well under the record high 159.7 from March. Price falls were seen in all the five sub-indices of the FFPI in August, with monthly percentage declines ranging from 1.4 percent for cereals to 3.3 percent for vegetable oils.
FAO Vegetable Oil Price Index
The FAO Vegetable Oil Price Index averaged 163.3 points in August, down 5.5 points (3.3 percent) month-on-month, pushing the index value slightly below its year-earlier level. The continued decline of the index was driven by lower world prices of palm, sunflower and rapeseed oils, which more than offset higher soyoil quotations. International palm oil prices fell for the fifth consecutive month in August, driven by increasing export availabilities from Indonesia, mainly thanks to lower export taxes, as well as seasonally rising outputs in Southeast Asia.
In the meantime, world sunflower oil values declined on lingering subdued global import demand that coincided with the gradual resumption of shipments from Ukraine’s seaports. International quotations for rapeseed oil also dropped in August, due to prospects of ample supplies for the upcoming 2022/23 season. By contrast, world soyoil prices rebounded only moderately, mainly because of concerns over the impact of unfavorable weather conditions on soybean production in the United States of America.
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.
September USDA WASDE Soybean report
- USDA says farmers will harvest 4.38 bb of soybeans in 2022 with a national average yield of 50.5 bpa.
- Revision is 153 mb less than last month’s forecast and reflects a 1.4 bpa cut to yield and half-million-acre revision in planted acreage.
- Toward the low end of pre-report expectations.
- USDA lowered ending stocks for 2022-23 to 200 mb. That’s 45 mb lower than last month and the lowest level in seven years.
- USDA lowered planted acreage to 87.5 million and harvested acreage to 86.6 ma.
- USDA increased beginning stocks by 15 mb to 240 mb, putting supplies at 4.633 bb.
USDA Domestic Soybean Crush
Domestic soy crush spreads on the board were lower to a 2-wk low. The CME Synthetic Soy Crush for Dec contracts was just $2.05/bu at midday.
USDA reported that the domestic soybean crush in July totaled 181 million bushels, up from 174 million bushels in June and 166 million bushels a year ago. Refined soyoil production reached 1.68 billion pounds in July, which was a 2% increase from June.
USDA Weekly Inspections
The weekly Inspections report from USDA had 436,851 MT of soybeans shipped during the week of 8/25. That was down from 686.8k MT last week and compares to 387k MT shipped during the same week last year.
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.
Soybean Stocks
NASS data showed September soybean stocks were 274 mbu carried into the 22/23 season. That compares to the average trade guess of 242 and last season’s 256.979 mbu. 2021/22’s final quarter usage was implied at 698 mbu, compared to the 512 mbu finish to last year. USDA revised the 21/22 production number to 4.465 bbu, which was up by 30 mbu from their prior figure.
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.
Weather patterns in Brazil and Argentina will be critical over the coming weeks for the top U.S. soybean competitors. While some areas have received a healthy soaking of rainfall this week, other areas have remained dry and may continue to see drought conditions as long as La Niña conditions remain in place.
Brazilian soybean exports in August reached 226.3 million bushels, versus year-ago results of 238.1 million bushels. Brazil’s CONAB expects 22/23 soybean production to increase 21% on higher area and improved yields compared to last year, to 152 MMT. Going into the monthly WASDE data, the trade average guess is to see 152 MMT for Brazil’s 22/23 soy crop.
Canada
Production estimates from StatsCan show the canola crop should reach 19.499 MMT, up from 13.8 MMT last year (revised up from their prior 12.6 MMT figure). The trade was looking for StatsCan to report 19.6 MMT. For soybeans, Canada is expected to harvest 6.4 MMT, up from 6.27 MMT last year, and above the 6.2 average trade guess.
Argentina
China has been buying Argentine beans after Argentina created a soy dollar exchange rate to encourage farmer sales.
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.
Ukraine
Ukraine’s sunflower and soybean harvests have begun. The country’s sunflower harvest is just 1% complete, with a total production of 81,700 metric tons so far. Ukraine is a significant player on the world sunflower oil export market.
Soybean Exports
Soybean export inspections amounted to 19 million bushels last week, compared to 10 million bushels a year ago, when the Gulf was recovering from a hurricane. Exports this year should maintain a sizable lead on last year through the first half of the year. Argentina has been a large old crop soybean seller in recent weeks, and another South American drought is needed for 2022-2023 exports to exceed last year.
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.
China Imports
USDA-FAS issued a report last week that showed China’s soybean imports are likely to fall due to waning demand from its swine and poultry sectors. The report expects China’s 2022/23 soybean imports to total 3.546 billion bushels. USDA’s Ag Attache reduced their forecast for Chinese soybean imports, with 21/22 needs lowered to 92 MMT and 22/23 reduced to 96.5 MMT.
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 once again sell another 18.4 million bushels of its state imported soybean reserves in an auction that will be held on September 30. The country has routinely offered similar sales throughout the year to keep local supplies boosted and cool high prices.
China has been buying Argentine beans after Argentina created a soy dollar exchange rate to encourage farmer sales.
Taiwan Imports
Private exporters announced to USDA the sale of 3.8 million bushels of soybeans for delivery to Taiwan during the 2022/23 marketing year, which began September 1.
South Korea Imports
South Korea purchased 60,000 metric tons of soymeal, likely sourced from South America, in an international tender that closed earlier today. The grain is for arrival around February 20.
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
- The weekly Commitment of Traders report showed showed long liquidation from specs through the week that ended 10/4. The 15,520 fewer contracts (14%) left the group 77,488 contracts net long – a 41 week low.
- Commercial soybean hedgers closed 2.1k shorts and added 7.4k longs for a 9.5k contract weaker net short of 106,835 contracts.
- In soymeal, the spec traders were 13,845 contracts less net long to 79,700.
- Managed money firms held a 4,337 contract stronger net long in soybean oil through the week, at 62,754 contracts as of 10/4.
Commodity Round Up
Highlights
- The Bloomberg Commodities Index jumped 5.1% (up 18.1% y-t-d).
- Spot Gold rallied 2.1% to $1,695 (down 7.3%).
- Silver recovered 5.8% to $20.13 (down 13.6%).
- WTI crude surged $13.15 to $92.64 (up 23%).
- Gasoline spiked 10.6% (up 23%),
- Natural Gas slipped 0.3% to $6.75 (up 81%).
- Copper declined 0.8% (down 24%).
- Wheat dropped 4.5% (up 14%),
- Corn added 0.8% (up 15%).
- Bitcoin increased $200, or 1.0%, this week to $19,570 (down 58%).
Source: USDA, Farm Progress
From The TradersCommunity Research Desk