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Looking for fresh soybean fundamentals

Ag Marketing IQ: Is there hope for a corrective price rally following February market reports?

Naomi Blohm

January 31, 2024

3 Min Read
Grain bins
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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:

  • Will there be any change to U.S. demand or ending stocks?

  • Will the USDA lower the Brazil soybean production number?

  • Will the Argentina production number be raised?

  • Also keep an eye on Chinese import demand.

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].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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