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The post-Thanksgiving soybean rally

Seasonals and challenging weather in Brazil are background support.

Naomi Blohm

November 22, 2023

5 Min Read
Market chart with wheat grains
Getty Images

Don’t get bamboozled into thinking soybean futures will trade in a lull with Thanksgiving in the rear-view mirror and the hustle and bustle of the Christmas season in front of us.

Looking back at years past, this is the time of year when soybean futures have a tendency to spring into action, often times providing an opportunity to market your cash soybeans on stronger price values.

What’s happened

Soybean futures continue to be the shining star in the grain complex. U.S. ending stocks of soybeans remain historically on the smaller side, with a demand story that remains strong.

Soybean futures prices have rallied nearly $1.00 since early October, as demand for soybeans in the United Sates remains strong, and weather in Brazil has been primarily hot and dry, affecting their pace of planting, and diminishing the notion of record production potential.

Imperfect Brazil weather affects planting pace

The planting pace in Brazil is slower than normal, and as of November 16, the crop was 68% planted, versus 80% a year earlier. There is industry chatter that some of their soybeans will need to be replanted due to germination issues, with some farmers potentially switching to planting cotton.

From a marketing perspective

On the supply side, the November 2023 USDA report suggested that for the 2023/24 crop year, there were 4.129 billion bushels of soybeans grown in this country. That was down from 4.27 billion bushels in 2022/23, and down from 4.465 billion bushels in 2021/22.

Strong U.S. demand

On the demand side, nearly half of the soybeans we grow are exported, and the other half are used for soybean crushing. Specifically, 1.755 billion bushels are slated for export demand while 2.3 billion bushels are to be used for crush. The result is that ending stocks are pegged at a very low 245 million bushels, which is down from 268 million bushels in 2022/23 and down from 274 million bushels in 2021/22.

Digging further into the demand story, the reality is that the United States has lost some soybean export demand over the years to a very competitive Brazil. Just one year ago, the USDA pegged U.S. soybean export demand closer to 2 billion bushels versus 1.775 billion bushels today.

However, the soybean demand that continues to grow is thanks to the strong crush industry in the United States, which continues to grow. Currently it is estimated that there are 60 crush plants operating in the United States, which use around 2.3 billion bushels of soybeans per year. In the coming years, according to industry estimates, new crush plants and expansions may add nearly 750 million bushels per year in crush capacity and soybean demand in the future.

What do the seasonals suggest?

In regard to making cash sales for soybeans, there are supportive factors for higher prices ahead. For beans stored at home, there is a strong seasonal suggestion, that March soybean futures trade higher in December, with a price peak in early January. (insert seasonal chart here?) That might be a great opportunity for cash sales.

So while there is a strong tendency from a seasonal perspective that March soybean futures rally into early January, there is an equal strong tendency for a price pull back into late January, and that makes sense. Think about it. The new calendar year often brings new farmer selling (a new tax year) in early January. Next, more is known regarding weather and crop size in South America. In addition, the industry has a better idea of acreage potential the US farmer will plant in spring. By that first week of January, more of the “unknowns” that pushed the soybean prices higher in December, become “known,” and thus prices then have a tendency to fall lower.

Prepare yourself

Due to the overall strong demand for soybeans, the market may be sensitive to any perceived disruptions in global supply. Therefore, weather forecasts in South America in the coming weeks will be scrutinized.

On the demand side, the traders will be eagerly watching weekly export sales reports, not only looking at the export demand of soybeans, but also soybean meal and soybean oil.  Monthly  USDA WASDE and NOPA soybean crush reports will also be looked at with great detail to see how the crush numbers fare from month to month.

In the weeks and months ahead, there will likely be plenty of price gyrations for soybean prices. Get ready to make those soybean sales! Set price targets, and be ready to pull the trigger and make cash sales.

There will likely be moments to capture various pricing opportunities and also manage risk. Get your marketing plans ready and be prepared for any price scenario to unfold.

Reach Naomi Blohm at 800-334-9779 , on X (formerly Twitter) at @naomiblohm, or by email 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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