July 17 – Is Something Happening to Soybean Prices?

Good Morning!

Soybean prices ended in the green yesterday and acting similarly this morning as the grain markets complex is all in the positive.

“More information is always better than less. When people know the reason things are happening, even if it’s bad news, they can adjust their expectations and react accordingly. Keeping people in the dark only serves to stir negative emotions.” – Simon Sinek (British Author)

graincents-trial

 

Is Something Happening to Soybean Prices?

Something incredible happened yesterday.

Soybean prices in Chicago ended in the green.

And by more than 10 cents a bushel!

Something even more incredible is that this morning, soybean prices are still in the green! If you’re catching the sarcastic tone I’m implying; you’ve got the skills to read between the lines. After so many down days, it certainly feels good to see soybean prices catch a little (I’ll discuss later why soybean prices did rally).

As Garrett noted in his regular Grain Markets Today column, wheat prices went the opposite direction of soybeans yesterday, losing some legs ahead of the afternoon’s crop progress report. However, wheat prices are back in the green this morning although the US winter wheat harvest is ahead of schedule and the US spring wheat crop’s good-to-excellent (G/E) rating still sitting at 80%.

2018-07-16-us-spring-wheat-crop-condition

Rounding out the complex, soybean G/E ratings slipped 2 points week-over-week to now sit at 69%. That’s still 3 points above the five-year average for this point in July.  Corn G/E ratings also dropped 3 points week-over-week and now sits at 72%, just 2 points above the five-year average for this time in the growing season.

Where do Soybean Prices Go Next?  

Yesterday we got some neutral-to-bearish news in the form of US export inspections. 47.9 million bushels (MBU) of corn, 23.3 MBU of soybeans, and 17.3 MBU of wheat were checked, but this was all below expectations and last week’s numbers.

Yesterday, soybean prices were able to rally on a record number of soybeans crushed in June. According to the National Oilseed Processors Association (NOPA), 159.23 million bushels of US soybeans were used. This was just below the average trade estimates of 159.64 million bushels, but it is a 15% jump year-over-year for June.

Also helping was a report that came out from COFCO – the national Chinese state grain-buying agency – which said they would look to diversify their feedstuff imports into more meals. This includes soymeal, but also others like rapeseed meal, canola meal, and sunflower meal.

Worth mentioning as well is that the EU is trying to get more friendly with the Chinese and could open up on trade, including feedstuffs. [1] Ultimately though, the idea that China would import more soymeal was something that we timestamped two months ago.

Back on May 11, we looked at the US soybean crush volumes for our GrainCents soybean subscribers and noted some interesting trends. Apart from Argentina importing American soybeans, soybean crush margins were improving at the time and gave rise to the thesis that, if China were to enact tariffs on US soybean imports, they might get a side hustle going through US soymeal instead.

In the coming week’s GrainCents Weekly Soybean Digest, we’ll be digging more into some of the potential changes to soymeal trade, but also who can ramp up or who is already maxed out.

As an indicator, soybean prices at Brazilian ports are now sitting more than 20% higher than those out of American ports. AgResource is reporting that some Brazilian boats of soybeans are being offered at $392 USD/metric tonne, $68 MT less than what US soybeans out of the Gulf of Mexico ports are being offered.

Soybeans Price Spread

2018 Second Half Outlook for Grain Prices  

The Chinese variable is something that we honed in on for our GrainCents soybean subscribers in our Soybean Prices Outlook for the Second Half of 2018. The Chinese factor will also have an impact throughout the rest of 2018 on corn pricescanola pricesbarley pricespea prices, and flax prices.

We also took a deep dive on where markets will go through the end of the year for our six crops:

 

Join growing list of GrainCents readers and start making more sense of the grain markets. There’s a lot of noise out there, and we’d like to help you understand what’s most important to watch for.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3159 
CAD, $1 CAD = $0.7600 USD)

Sept Corn: 3.5¢ (1.02%) to $3.453 USD or $4.544 CAD
Aug Soybeans: 6.8¢ (0.82%) to $8.363 USD or $11.005 CAD
Aug Soybean Meal (per short ton): $2.30 (0.70%) to $331.40 USD or $436.08 CAD
Aug Soybean Oil (cents per lbs): 0.05¢ (0.18%) at 27.69¢ USD or 36.44¢ CAD  
Sept Oats: 0.5¢ (0.22%) to $2.320 USD or $3.053 CAD
Sept Wheat (Chicago): 5.8¢ (1.19%) to $4.943 USD or $6.504 CAD
Sept Wheat (Kansas City): 6.3¢ (1.30%) to $4.908 USD or $6.458 CAD

Sept Wheat (Minneapolis): 2.8¢ (0.53%) to $5.310 USD or $6.987 CAD
Nov Canola: $0.60 (0.12%) to $11.068/bu / $488.00/MT CAD or $8.411/bu / $370.86/MT USD

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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