The price climb seen in agricultural contracts last week was nothing short of impressive and also stressful for buyers of commodities. For the week, May-21 soybean futures rose by over $0.50 per bushel with just a few days before the contract’s expiration. Jul-21 soybean futures closed the week at $15.89 per bushel, up nearly 66 cents over five sessions. Jul-21 soybean meal futures ended the week at $441.80 per ST; likewise, soybean oil futures closed at $0.6448 per pound.
Chinese demand for soybeans appears to have mostly shifted to South America, most notably Brazil, which exported a record 17.4 MMT of soybeans, 74 percent of which was destined for China. In Argentina, low levels on the Parana River—caused by dryness in Brazil, where the river originates—are forcing shippers to lower loading capacities by as much as 7,000 MT to allow safe navigation. Harvest there is progressing nicely, but conditions on the river are ultimately slowing the movement of agricultural products into the export market, including soybeans and soybean meal.
As far as WASDE expectations, analysts are projecting 2020/21 U.S. ending stocks will fall slightly to around 118 million bushels. With this week’s report providing the first formal look at potential balance sheets for 2021/22, the average trade estimates for global and domestic soybean production are 374.5 MMT and 4.431 billion bushels, respectively. Many in the trade believe acreage will rise in June’s Acreage report on strong new-crop prices over the past few months and favorable conditions for planting, which should encourage farmers to maximize production. It is worth noting, however, that recent futures market dynamics have shifted favor towards corn: The current soybean-to-corn ratio (Nov-21 soybeans vs. Dec-21 corn) is at 2.26, favorable for corn.
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