Soybean prices rallied Friday on Chinese buying of U.S. soybeans and fears that ongoing dry weather will threaten yields. Soyoil rose 3% Friday giving support. For the week Soybeans sill closed down 1.68%, holding most of last week’s biggest weekly gain in 22 years where prices rose 12.41%. Private exporters reported two more large soybean sales, both for 4.9 million bushels to USDA Friday. With the current supply and demand situation in the U.S. relatively tight on soybeans, we need to have a trend line yield of 51.5 bushels per acre on soybeans.
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
- August futures picked up 1.5 cents to $16.1650,
- September futures tracking a penny higher to $14.6225.
- On Thursday, commodity funds were net buyers of all major grain contracts, including corn (+5,000), soybeans (+5,000), soymeal (+3,000), soyoil (+1,000) and CBOT wheat (+500).
- Last week saw some recovery from the fifth consecutive drop and marks the smallest bullish position since Dec. 21 of last year, the CFTC said.
- Soybean basis bids were largely steady but did show some significant variability across a handful of locations Friday, moving as much as 15 cents higher at an Illinois river terminal and as much as 20 cents lower at an Indiana elevator today.
- Preliminary volume estimates were for 150,206 contracts, which was slightly below Thursday’s final count of 162,371.
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 off under 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.
June NOPA Soybean Crush report
June crush was reported at 165.7, above both the Reuters and Bloomberg averages of 164.5 and 164.6 as well as 13.3 million more than the June 2021 figure. September-June crush stands at 1.738 billion, 33 mbu/2.0% ahead of the 20-21 pace but remains below the level suggested by the 3.0% increase forecast by the USDA.
Slightly negative soybeans as the YTD crush remains below USDA expectations; Oil stocks were well above expectations suggesting continuing sluggish off-take while domestic meal disappearance remains solid.
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’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.
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 will again auction off another 18.4 million bushels of its state soybean reserves on August 12. The country has routinely offered similarly sized auctions throughout 2022 in an attempt to boost local supplies and quell high prices.
Soybean Exports
Private exporters reported two more large soybean sales to USDA on Friday. Both sales were for 4.9 million bushels, slated for delivery to China and unknown destinations, and both sales are for delivery during the 2022/23 marketing year, which begins September 1.
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
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
Money managers last week again reduced their net-long positions, or bets on higher prices, in corn and soybean futures, according to data from the Commodity Futures Trading Commission.
Investors held a net-103,315 corn-futures contracts as of July 19, the CFTC said in a report.
That’s down from 128,524 contracts a week earlier and the fifth straight decline, and marks the smallest net-long position since Sept. 29, 2019.
Speculators also reduced their net-longs in soybeans, which fell to 83,070 futures contracts from 90,735 contracts the previous week, the agency said.
That’s also the fifth consecutive drop and marks the smallest bullish position since Dec. 21 of last year, the CFTC said.
COT on commodities covering the week to July 12 saw selling pressure from hedge fund begin to ease. The net long dropped to 900k lots, lowest since June 2020 but the 52k reduction was well below the 190k average seen during the previous four weeks.
Specs turned net buyers of crudeoil, copper and sugar with selling seen in natgas gold soybeans corn wheat and coffee. The gross position (long & short) was cut by 177k reflecting a high degree of uncertainty and vacations lowering exposures
via Ole S Hansen @Ole_S_Hansen
Commodity Round Up
- The Bloomberg Commodities Index dropped 3.3% (up 18.8% y-t-d).
- Spot Gold increased 0.5% to $1,776 (down 2.9%).
- Silver fell 2.3% to $19.90 (down 14.6%).
- WTI crude sank $9.61 to $89.01 (up 18%).
- Gasoline slumped 8.3% (up 28%),
- Natural Gas declined 2.0% to $8.06 (up 116%).
- Copper slipped 0.6% (down 20%).
- Wheat sank 4.0% (up 1%),
- Corn declined 1.6% (up 3%).
- Bitcoin declined $520, or 2.2%, this week to $23,260 (down 49.8%).
Source: USDA, Farm Progress
From The TradersCommunity Research Desk