Soybean prices recovered on Friday following some other commodities higher such as corn and crude oil after seeing four-week lows earlier in the week. July futures rose 15.75 cents to $16.09, with August futures up 10.5 cents to $15.25. Soybeans have been tracking lower palm oil prices as Indonesia is allowing more exports after they had capped them cap earlier in the year. China’s national grain trade center announced Friday it will auction 18.4 million bushels of its imported soybean reserves on July 1.
Another 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.
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.
Soybeans Futures Highlights
- U.S. Soybean July futures rose 15.75 cents to $16.09, with August futures up 10.5 cents to $15.25.
- Soybean basis bids were steady to weak on Friday after dropping 4 to 8 cents lower across four Midwestern locations today.
- Preliminary volume estimates were for 200,096 contracts, moving well below Thursday’s final count of 316,550.
- Old crop soybean sales fell to a marketing-year low of 1.1 million bushels last week. New crop sales added another 9.7 million bushels, for a total of 10.8 million bushels. That was toward the lower end of trade estimates, which ranged between 1.8 million and 29.4 million bushels.
- Cumulative totals for the 2021/22 marketing year remain moderately below last year’s pace, reaching 1.882 billion bushels.
Soybeans Technical Outlook
Soybeans broke out of the bull pennant framed by +4/8 and +1/8 but was unable to sustain the break closing right at the breakout. Support at the Tenkan gave way cracking under the futures pivot at $17/bushel benchmarks. Futures spat the Weekly +4/8 over $17.50/bushel three times now. Support is the Kijun just over the 8/8 and the pennant. The weekly cloud and 50wma mingle around the $14.6/bushel benchmark are massive.
China
China’s national grain trade center announced today it will auction 18.4 million bushels of its imported soybean reserves on July 1. The country has offered a flurry of similarly sized sales throughout 2022 in an effort to boost supplies and tamp down high prices.
In April, Chinese purchases of Brazilian soybeans jumped 120% above March’s tally, with 231.5 million bushels after some weather-delayed cargoes finally arrived. China also imported 60.3 million bushels of soybeans from the United States last month, roughly half of its U.S. deliveries in March.
Soybean Exports
Soybean export shipments inched 1% lower than the prior four-week average to 18.2 million bushels. Mexico, Egypt, China, Germany and Pakistan were the top five destinations.
Cumulative totals for the 2021/22 marketing year remain moderately below last year’s pace, reaching 1.882 billion bushels.
USDA’s outlook in early June for soybeans saw lower beginning and ending stocks, plus higher prices. The agency raised its soybean export estimates by 30 million bushels to 2.17 billion, “reflecting strong export sales and a reduced export forecast for Brazil.” That meant 2022/23 ending stocks fell 30 million bushels to 280 million, versus an average trade guess of 307 million.
EU Imports
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.
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.
USDA-ERS Report
Last week 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.
Commodity Round Up
- Bloomberg Commodities Index fell 4.3% (up 22.3% y-t-d).
- Spot Gold slipped 0.7% to $1,827 (unchanged).
- Silver declined 2.3% to $21.16 (down 9.2%).
- WTI crude fell $1.94 to $107.62 (up 43%).
- Gasoline rose 2.4% (up 74%),
- Natural Gas sank 10.4% (up 67%).
- Copper slumped 7.1% (down 16%).
- Wheat sank 10.5% (up 22%),
- Corn dropped 7.8% (up 14%).
- Bitcoin recovered $750, or 3.6%, this week to $21.277 (down 54%).
Source: USDA, Farm Progress
From The TradersCommunity Research Desk