Soybean prices selling on Friday picked up despite the initial bullish looking numbers from USDA’s Thursday morning release of the June 30 Acreage report. USDA took off 2.6 million acres from the March 31 soybean planting estimate, dropping it to 88.3 million acres. However, the results for soybeans hinted at smaller than expected demand usage rates between March 1, 2022 and June 1, 2022. Favorable Midwestern forecasts along with lurking recession worries added to demand worries. July futures tumbled 53 points lower to $16.22, with August futures down 50 cents to $15.1050.
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.
Soybeans Futures Highlights
- U.S. Soybean July futures fell 53 points lower to $16.22, with August futures down 50 cents to $15.1050.
- Soybean basis bids were steady across most Midwestern locations on Friday but did climb 10 cents higher at an Indiana processor today.
- Preliminary volume estimates were for 188,843 contracts, sliding slightly below Thursday’s final count of 210,298.
Soybeans Technical Outlook
Soybeans 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. Pressure came from futures spitting the Weekly +4/8 over $17.50/bushel three times. Support is the Cloud just over the 6/8 and the January breakup. The weekly cloud and Murray mingle around the $14.6/bushel benchmark are massive.
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.
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’s government reported that the country exported 372.2 million bushels of soybeans. That was a year-over-year decline of 8.5%. Brazil also exported 41.4 million bushels of corn last month.
China
China plans to auction another 18.4 million bushels of its state reserves of imported soybeans on July 8. The country has offered a series of similarly sized auctions throughout 2022 in an effort to lower prices and boost local supplies.
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 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.
Commodity Round Up
- Bloomberg Commodities Index slumped 3.4% (up 18.1% y-t-d).
- Spot Gold declined 1.1% to $1,827 (down 1.2%).
- Silver dropped 6.2% to $19.85 (down 14.8%).
- WTI crude added 79 cents to $108.41 (up 44%).
- Gasoline dropped 5.6% (up 65%),
- Natural Gas sank 8.4% (up 53%).
- Copper fell 3.4% (down 19%).
- Wheat sank 10.2% (up 9%),
- Corn dropped 9.9% (up 2%).
- Bitcoin sank $1,700, or 8.0%, this week to $19,570 (down 58%).
Source: USDA, Farm Progress
From The TradersCommunity Research Desk