Soybean prices continued to slide as seasonal pressures complemented ongoing trade pressures.
Although the U.S. struck a deal with Mexico this week, the inability to get Canada on board with a revised NAFTA deal added additional pessimism to the complex. Before we get into the supply and demand factors impacting soybeans this week, let’s take a look at the performance of soybean prices.
In the month of August, front-month soybean prices were a bit more than 8% lower than where July ended, and more than 11% below this time a year ago. Soybean prices were also about 75 cents / bushel lower than the 5-year average for the end of August.
For our GrainCents readers, we’re watching a variety of factors that might affect soybean prices: 7 are noise, 3 are bearish, 3 are bullish.
(If you’re not familiar with what “noise” is, then we recommend you check out our GrainCents risk management process towards soybean prices.)
This month, GrainCents investigated topics such as:
• The massive U.S. soybean supply shown in the August WASDE report,
• The likelihood of China buying U.S. soybeans,
• The falling price of U.S. grain exports, and
• StatsCan’s estimates for soybean production
Last week, the USDA announced Trump’s plan to subsidize crops (and farmers) affected by heavy tariffs. Each crop and livestock farmer can receive up to a maximum of $125,000 in compensation. These payments and limits are completely separate from existing government programs like PLC and ARC.
However, to be eligible, “applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000.”
Specific to soybeans, the USDA is offering a subsidy of $1.65/bu on 50% of 2018 production.
GrainCents will continue to monitor how these subsidies will affect soybean prices. If you want to be more on top this sort of thing so you can make more sense of grain markets, join us for your free trial at GrainCents.