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Can the demand equation bring higher soybean prices?

Trends in Global Soybean Production

Soybean bulls continue to argue the case for higher prices based on extremely strong global demand, particularly in palm oil.

The bulls are very excited to see another round of strong weekly export inspections, which were reported well above trade expectations at 2.509 MMTs. Keep in mind overall soybean inspections during the current marketing year are now up close to +14%.

Also, confirming strong demand was yesterdays September NOPA crush report, which showed the crush at 129.4 million bushels, down slightly from August, but well above most analyst estimates and also well above the previous September forecast.

In fact, this was the highest NOPA crush number for September, since back during the record year of 2007.  Soybean oil supplies were a bit lower than most inside the trade were looking, and have now been moved lower, for three consecutive months, hence providing the bulls with an additional reason to argue the case for higher prices on continuing surprises surrounding overall demand.

Many inside the trade are keeping a close eye on the oil demand being seen from both China and India. I should also point out that soybean oil is technically breaking out to the upside, closing at levels we haven't seen since the summer of 2014. As a producer, I obviously like what I'm seeing on the charts and I love the huge demand headlines, but I remain extremely nervous about the longer-term downside risk if South America gets cooperative weather and grows another mammoth crop.

For the moment, I am going to remain patient. Demand is insanely strong and weather in South America still remains a bit of wild-card, so I wait.  As for pricing the remaining bit of our 2016 production, I'm still hoping to see a breakout in the NOV16 contract north of $10.20 per bushel. As for reducing more of our upcoming 2017 price risk, I'm much closer to making another cash-sale. If I pull the trigger I'll update all of our paid subscribers in our mid-day "Special Report." 

Make sure you continue to pay close attention to the price action in the deferred contracts. The USDA reported the U.S. soybean harvest gained +18% last week and now stands at 62% complete, which is still slightly behind our traditional average and -11% behind last years pace.

States running ahead are: Kentucky +27%; Arkansas +18%; North Dakota +7%; Mississippi and Tennessee +5%; Louisiana +3%; Minnesota +1%. Indian on pace with averages. Kansas -18%; Ohio +14%; Michigan -13%; Nebraska and Wisconsin -12%; Illinois South Dakota -5%; Missouri -4%.


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