It’s probably a good thing that the markets aren’t open on Monday for soybean traders.
We’re going to need an extra day to wrap our heads around that January WASDE report.
Here are the numbers for the U.S. soybean complex…
• Quarterly stocks: As of December 1st, 2017, there was still 3.157 billion bushels of soybeans available in America. That’s under the average trade forecast of 3.181 billion bushels. It’s also 9% higher from the 2.9 Billion bushels available in the previous year.
• Ending Stocks: 470 million bushels. That’s a little below 472 million bushels the market was expecting but 13% higher than 2016/17’s ending stocks of 301 million bushels.
• Exports: Lowered by 65 million bushels to 2.160 billion (or 58.8 million tonnes. Comparably, Brazil’s exports were raised by 1.5 million tonnes to a new record of 67 million tonnes).
• Yields: The USDA cut the estimate to 49.1 bushels per acre. That’s a 0.4 bushel cut from last month’s estimate. It’s also 2.9 bushels below last year’s record yield.
• Production: With the lower yields, the USDA cut production expectations to 4.392 billion bushels. But this is a 2% jump from 2016 for a new record.
• Harvested Acres: 89.5 million, an 8%, or nearly 6 million-acre jump from 2016’s area that got combined.
There was some good news for the soybean markets, but it’s not going to be enough right now to get us back to that $10.00 level for the front-month contract.
That’s just the hard truth.
There was a solid cut to yield expectations in this report, and South American production numbers were slightly below trade expectations. Brazil was upgraded by 2 million tonnes to 110 million, while Argentina was felled by just 1 million tonnes to 56 million tonnes.
With dry weather still in the forecast for Argentina, there are some heavy expectations that the soybean harvest there could get lighter (AKA smaller).
Global carryout is slated to come in at 98.6 million metric tonnes.
That figure is a slight increase from the 98.32 million pegged last month.
Overall, the smaller yields in America are the main catalyst for the buying spree on Friday that helped soybeans climb a dime in Chicago.
However, we still know that there’s a record amount of soybeans that are left in the world, and the Brazilian crop seems to be getting bigger every day. Further, US soybean exports are tracking 14% below last year.
We’ll need to see some stronger US export activity, but this will be hard-pressed as the Brazilian harvest starts to come online and heads to its ports.
With November 2018 and January 2019 soybean prices still sitting below $10 USD / bushel on the Chicago futures board, the idea that American farmers might plant more soybean acres in 2018 might be losing some strength.
However, if some South American weather premium does back to the market – whether it’s because of dryness or harvest issues – we could certainly see a rally that propels us to augment our sales position for both old and new crop.