After a bullish WASDE report (arguably more so for corn and wheat than soybeans directly), prices rallied after weeks of consolidation. Sept-21 soybean futures closed last week higher by nearly 32 cents at $13.73 per bushel.
Soybean oil followed suit, with the Sep-21 contract closing higher by an even 3 cents at $0.6372 per pound.
S&D and fundamental factors
The most notable change in Thursday’s WASDE report was the lowering of projected 2021/22 U.S. soybean yield by nearly 1 bushel per acre to 50 bpa. Most of the loss in production was offset by reductions to crush and exports of 20 million bushels each. Ending stocks remained unchanged at 155 million bushels, and stocks-to-use is estimated at 3.5 percent.
Weather, macro indicators, and news
California’s Proposition 12 could wreak havoc on the domestic hog production industry. It puts into place stringent animal housing requirements (animal-confinement rules) for any meat products ultimately sold in California. Per Rabobank, the cost per sow for a barn to meet these rules could increase from between 36 and 113 percent. Producers are waiting for an array of legal challenges to the new law to play out before making the investment, but thus far the United States Court of Appeals for the Ninth Circuit ruled against an appeal by the National Pork Producers Council and the American Farm Bureau Federation.
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