February 7 – February WASDE Action Plan for Soybean Prices

On Thursday, all eyes will be on the USDA’s monthly WASDE report. For soybean producers, we’re focused on two major factors. Let’s dive into them right now.

On Thursday, all eyes will be on the USDA’s monthly WASDE report. For soybean producers, we’re focused on two major factors. Let’s dive into them right now.

First, U.S. carryout. Last month, the agency pegged that carry-out figure at 12.8 MMT. Most analysts are projecting an increase overall.

Right now, sentiment isn’t very strong about U.S. soybean sales. We’ve seen a string of weakness in export sales and inspections. So far this year, sales of U.S. soybeans are off 14% from the pace last year. The reason: China is buying more and more soybeans from Brazil due to stronger protein content.

Second, we want to see what adjustments are made by the USDA to production in Brazil and Argentina.

Last month the USDA estimated the carryout would be 470 million bushels (12.8 million mt).

Over the last week, we’ve seen private economic groups and analysts down in Argentina make downward revisions to the size of the nation’s crop. Hot, dry conditions have battered the region for weeks, prompting analysts to slash yield expectations by double digits.

The USDA set its Argentine number to 56 MMT in January.

The Buenos Aires Grain Exchange recently said it will be 51 MMT. Rabobank says 51.5 MMT.

We’ve seen analysts set an average projection for this month to a downward revision just under 54 MMT.

But as we have noted, the USDA can be very sluggish when it comes to revisions at this point of the year. They sometimes take a very conservative approach. Anything above 53.5 MMT will likely weigh negatively on soybean crops.

Meanwhile, there’s another factor that could hurt in South America. Many analysts anticipate that the agency will increase its estimate for Brazil’s crop. Last year’s record crop was 114 MMT.

In January, the USDA pegged the Brazilian crop at 110 MMT. Any increase would not only offset expected cuts from Argentina, it could affect global carryout and U.S. export figures in negative way.

We’ll be back on Thursday after the release to discuss prices. If this report surprises, we may be on the verge making a sale in the next 48 hours. Stay tuned.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.