February 18 – Soybeans Weekly GrainCents Digest

Soybean prices had an awesome week, climbing 40¢ (or 4%) for the front month, while new crop prices gained more than 2.2% (or 22¢).

Is there more upside?

Good morning,

For front-month March 2018 soybean contracts, Argentine bullishness helped prices rally nearly 4%, or about 40 cents USD/bushel on the Chicago Board of Trade this week.

For new crop, the November 2018 contract gained 22 cents, to close 2.2% higher week-over-week.

The uptick in prices allowed us to sell into strength earlier this week and move our position to 80% sold in old crop, and 20% sold in new crop.

Soybean prices continued to rise due to falling expectations for the size and quality of the crop in Argentina, and high moisture content in beans harvested so far in Brazil.

These two factors are pushing prices higher in the short-term and we’re definitely looking into making moves on our last 20% of old crop (see targets below) and our next 10% sale on new crop soybeans. 

But the long-term trends remain concerning, particularly around China’s sentiment toward U.S. soybean exports.

Despite these concerns, the USDA does anticipate that soybean export growth will outpace all other crops in the coming decade. The USDA released its 10-year outlook for U.S. soybean production and exports this week.

The USDA projects that American soybean exports will increase by 12% to 68.4 MMT. Its rivals Brazil will see 48% export growth to 96.4 MMT. The agency projects Argentine exports will increase by 76% to 14.1 MMT.

This week, the Buenos Aires Grain Exchange announced that just 11% of the nation’s crop is rated good or excellent.

That figure compares dismally against the 56% rated poor or very poor. Analysts at the BAGE expect that more dryness will dominate the forecasts.

China’s threat to restrict U.S. soybean access to its market continues to weigh on broader expectations for producers moving forward. On Thursday and Friday, we took a deeper dive into the potential impact of this decision.

We also advised readers to take a different approach and to be far more progressive in their planting decisions in order to achieve the best premiums.

Right now, we’re eyeing specific targets next week on the following contract months (with the price the contract closed at on Friday in brackets):

• March 2018: $10.65 ($10.215)
May 2018: $10.75 ($10.325)
July 2018: $10.90 ($10.423)
November 2018: $10.65 ($10.22)
January 2019: $10.75 ($10.263)

We’re not opposed to going out and negotiating basis contracts – after all, you’ll have another 8 months to price out the futures!

To post a basis contract on FarmLead, just put $0.01 in the price field of a Post New Offer page, and indicate in the comments section what sort of basis you’re looking for and the specific delivery period/futures contract you’re looking to price off.

Buyers can come in and make counteroffers just on the basis, helping you lock in something while we see the futures markets rise.

Enjoy your Sunday!

– Brennan and Garrett

February 16 – What Sales Choice Will You Make Moving Forward?

February 15 – What Impact Would Less US Soybeans Have on Chinese Consumers?

February 12 – Planting Oilseed on Oilseed? Easy There Tiger

February 12 – GrainCents Crop Sales Position Update

February 12 – How Are Chinese Soybean Buyers Dealing With Import Requirements?

February 8 – Recap of the February WASDE Report

February 7 – February WASDE Action Plan for Soybean Prices

February 6 – COFCO is the Real the King of Soybeans

February 6 – Canadian Soybean Stocks Still Bulging in 2017

February 3 – Why is the AAFC Pessimistic About Canadian Soybeans Prices?

February 1 –  January Recap on Grain Prices

January 31 – Should You Really Be Selling Soybeans at $10?

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.