After trading in a very quiet trading range for much of May, soybean futures finally broke out of that range with a twenty-five cent price rally. The market was supported by news of steady export sales to China, as well as a lower U.S. Dollar. Soybean futures prices continue to be in an uptrend for the moment, waiting for fresh data from today’s USDA report for next potential price direction.
Monitor soybean export demand
In today’s report, traders will tune into export demand. In April, the USDA had 2019/20 soybean exports pegged at 1.775 billion bushels. That number was lowered on the May report to 1.675 billion bushels. Many in the industry feel the export number may indeed be lowered again on the upcoming report, as export sales are lagging against USDA projections.
Regarding 2020/2021 soybean export demand, there is a more optimistic tone. The USDA feels exports will be more robust in the coming year with exports expected at 2.05 billion bushels as reported on the May WASDE report.
Will we see an adjustment to 2019/20 crop supply?
Also in today’s report, we will get an update on 2019/20 production totals as the farm data from North Dakota (surveyed again due to their late harvest) will be included on this report. On the May 12 report, 2019/20 production was pegged at 3.557 billion bushels. Looking ahead to new crop production, acres will not be updated until the June 30th Planted Acreage report. The current estimate of soybean planted acres is 83.5 million acres based on the March 31 Planting Intentions report. And for the most part, planting progress is going quite well, with 86% of the crop now planted as of June 7th. However, one little nugget of news jumped out at me on this week’s crop progress report. Only 74% of the soybeans are planted in North Dakota.
North Dakota soybean acres
About 26% of the soybeans in North Dakota still need to be planted, and yesterday was the state’s prevent plant date deadline. The soil conditions are still soggy for many parts of that state, leaving many to wonder if farmers there will opt for prevent plant, leaving 26% of expected acres unplanted.
This is a significant number, as North Dakota is the 4th largest soybean state in the nation.
In 2020, they were expected to plant 6.6 million acres of soybeans. If 26% of those acres are not planted, that equates to 1.716 million acres of soybeans NOT planted. If those acres do not get planted, that will affect new crop ending stocks, providing the impression that ending stocks might be getting smaller.
The other important factor about North Dakota soybeans is that they are important for shipping out the Pacific Northwest. According to the North Dakota soybean council, 72% of the soybeans grown in North Dakota are exported out the PNW, and 80% of the soybeans shipped out of the PNW are destined for China.
The soybean story may just be getting started. Keep an eye on exports, and both old and new crop production numbers.