Soybean bulls were happy to see lower ending stocks! Many in the trade thought we could see an increase from the record large yield of 48.3 bpa raised another .5 bpa with this month's report. The USDA, in somewhat of a surprise move, lowered yields to 48.0 bpa, although still a record.
With the lowering of harvested acres by just over a half million acres, the total soybean production was lowered 51 million bushels. The U.S. ending stocks were lowered 25 million bushels to 440 million bushels. Certainly not a massive move, but most were thinking the likely move by the USDA would be to increase the stocks number to 500 million bushels. Along with the US production cut, was a marginal cut to world production by just over 1 million metric tons.
The South American weather has been questioned over the past few weeks, turning more favorable recently, but have the early weather issues been enough to put this crop under some stress? The numbers showed the USDA still thinks a record soybean crop will be grown, leaving the estimate at 100MMT. However, early yields we have heard could be off as much as 5-10%. It is all about the Brazilian production and weather, and any hiccups that would limit production to numbers closer to between 95MMT and 98MMT would be found very friendly by the soybean market.
On the flip side, there's some talk the Argentine production estimate could be raised by 1-2 MMTs. Another wild card is the managed money, with most being on the short side potentially being another spark, that could help fuel a rally in bean prices.