Soybean futures have lost $2 in value since mid-November with price outlook continuing to shift. Is there any a recovery rally?

What's happened

Coming off of two years of tight soybean ending stocks and higher prices, soybean futures prices have lost their luster.

While current U.S. ending stocks for soybeans are still small from a historical perspective, they are larger than one year ago, with a large South American supply ready to be harvested.

The January USDA report increased total U.S. supplies with ending stocks now at 280 million bushels. This is up from the December 2023 USDA report which had pegged ending stocks at 245 million bushels.

Really weighing on the market is the perception of a large South American crop and hefty global carryout levels. Global ending stocks are 114.60 mmt, up from 101.87 mmt one year ago.

From a marketing perspective

Remember, it’s perception that often times drives price movement. Right now the perception is that the world will have enough supplies of soybeans, and that is why prices have fallen lower.

Unless there is a perception shift that soybean supplies are getting suddenly smaller, it may be hard for soybean futures prices to gain upward price traction.

Looking forward, traders will be watching signs of improving U.S demand for soybeans, if any.

U.S. soybean crush demand may continue to grow. However U.S. export demand for soybeans may diminish under the weight of large South American supplies.

Looking ahead trade will begin to discuss potential U.S. planted acres for spring of 2024.

Prepare yourself

Looking to the month of February, there may be a few surprise pieces of information that unfold. Early February brings a soybean crush report which will show if there is an uptick in soybean demand for crush.

The next USDA WASDE report on Feb. 8 will answer several questions:

Then Feb. 15-16 is the USDA Outlook Forum, where first glimpses of planted acres and demand for U.S. grain will be announced. While not an official USDA report, trade is starting to treat it as one.

The funds do hold a hefty net short position and current market perception has turned negative. A glimmer of friendly news could spur short covering and a significant price corrective rally. However, a lack of friendly news will likely keep soybean prices in a sideways to lower pattern for the short term.

Reach Naomi Blohm at 800-334-9779, on X (previously Twitter): @naomiblohm, and at [email protected].

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