With 2017 now in the books, it’s time to look back at the major factors impacting prices in the soybean market. By knowing where we were, we will have a better sense of where we’re heading in 2018 and beyond.
Previously, we’ve talked about the most bearish thing about soybeans.
We’v also talked about the most bullish thing about soybeans.
What’s clear moving forward though is that major trends in the space will not only affect prices in the U.S., but also decisions by farmers on what to grow and sell in the year ahead. Let’s take a look at the major events and price movements that defined 2017 soybean prices.
Soybean Cash Prices Highlights
The cash price of soybeans in Chicago tells an intriguing tale of highs, lows, yield estimates, and the question for $10 bushels. For the year, soybean prices fell 4.15% on the year.
Cash prices edged below $10.00 per bushel in early March and would only whiff that level one time throughout the balance of the year (more on that in a moment.) Rising expectations of a record crop started to trickle into the news cycle in the early months of the growing season as North American planting got underway.
Prices bottomed out in mid-June, falling under $8.80 per bushel. A short-rally would see soybeans follow wheat prices higher on speculation about drought conditions and questions about yield expectations. Cash prices topped out in the short-term at $9.95.
It was all downhill after the July WASDE report though.
Was the USDA Right About Soybean Yields?
Of course, that July WASDE report was a bit more forgiving to soybean farmers than it was to corn producers.
The bullish number came in ending stocks. The USDA pegged the U.S. number at 460 million bushels. Average trade expectations for July matched the agency’s number for June at 495 million.
The report however indicated three bearish numbers: An uptick in production by five million bushels, an uptick in acreage, and no change in yield at 48.0.
Many believed that the USDA was a bit too optimistic about quality. We heard a lot of chatter and expectations that yields would fall in the following months.
But those downward revisions never came. Instead, soybean yield expectations increased. Production figures followed.
• July WASDE Soybean Yields and Production: 48.0 bpa for 4.260 billion bushels.
• August WASDE Soybean Yields and Production: 49.4 bpa for 4.381 billion bushels.
• September WASDE Soybean Yields and Production: 49.9 bpa for 4.431 billion bushels.
• October WASDE Soybean Yields and Production: 49.5 bpa for 4.431 billion bushels
• November WASDE Soybean Yields and Production: 49.5 bpa for 4.425 billion bushels
• December WASDE Soybean Yields and Production: 49.5 bpa for 4.425 billion bushels
U.S. soybean production from the 2016/17 final estimate to the 2017/18 forecast is poised to increase by 3.5 million tonnes.
The uptick in U.S. production contrasts expected declines around the globe.
The World is Awash in Soybeans
Again, like corn, it’s worth noting that the world is awash in soybeans. Brazil’s record crop in the previous year is now creating a number of price pressures for American suppliers. Even though Brazil is poised to see a 6.1 million tonne decline from last year, it will still produce 108.0 million tonnes according to the USDA.
However, more private estimates are pegging the Brazilian soybean crop – which is currently in the middle of its growing season and will start to get harvested in late January – is above 110 million tonnes. Last year, Brazilian farmers produced a record 114.1 million-tonne crop.
We remind readers though that South American soybean sales by farmers are actually sitting behind where they were at this time a year ago. Despite this, Brazil will retain its title as top soybean exporter in 2017, with China doing more soybean business on the southern side of the equator.
2018 Soybean Price Outlook
With more information flying at farmers than ever, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain.
That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their soybeans.
In addition, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day.
With this insight, we help you identify windows to get the best price possible for your crop.
And next week, we’re giving our GrainCents soybean subscribers a special report that is worth more than an annual subscription to the service on its own.
We’re unveiling our 2018 soybean forecast exclusively to our readers.
Inside this report, I’m going to discuss the critical factors that will affect your soybean crop in 2018. More important, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.