November 9, 2014
With nearly a $1.50 per bushel rally the past month, November 2014 soybean futures closed up 9¢ Friday at about $10.40. January 2015 futures finishing the week at $10.36, up more than 8¢. If not already, soybean growers should consider taking advantage of the nice rally, said Chris Hurt, Purdue University ag economics professor.
“I think this is a good selling opportunity,” Hurt told Corn+Soybean Digest Friday. “It’s about as much recovery as we can expect in the short run. Futures at near $10.50 is a whole lot better than $9.”
Strong exports, soybean harvest delays and a dry soybean meal pipeline helped pull up prices. November soybean futures tanked to just over $9 Oct. 1. They then surged to near $9.70 by mid-October. The rally pushed prices to about $10.50 by Halloween.
Brugler Marketing and Management noted Friday that exports for the week were the highest of the marketing year at 2,915,600 metric tons, with more than 78% of it heading for China. “USDA shows that 77% of the projected exports for the year are already sold or shipped,” Brugler analysts said. “The average for this date would be 66%, so an upward revision is expected.”
Brugler said industry analysts project this year’s soybean production estimate to be between 3.903 billion bushels and 4.064 billion bushels in the monthly WASDE report scheduled for release Nov. 10, 2014.
Hurt agreed that the supply and demand report likely will update soybean exports. “It’s a stronger export pace than USDA has forecast,” he said. “Also, we expect the domestic crush to be higher. We expect to get more animal usage of soybean meal in the second half of the marketing year (from February on). That gives us hope on the soybean price side.”
He noted that a downside could be South American production, which is seeing a 5% increase this year. “The world’s largest total crop is coming out of South America,” Hurt said. “Soybean prices are strong relative to corn and wheat. That keeps the incentive high for South American to plant soybeans.”
China remains a main force in soybean prices. It jumped at buying more U.S. beans when the marketed tumbled. “China became aggressive buyers at $9,” Hurt said. “When the world’s largest buyer of soybeans starts to buy, others think that is the market low.”
Hurt said soybean prices might remain in the current trading range for several months. “My guess is that we have a price pattern through the winter,” he said. “With the rally of near $1.50, there’s a good chance the first rally off the bottom established the trading range.
“A trading range is a place where the market says ‘we know what the U.S. crop is’. Then it takes something even bigger, like China buying more beans, or weather problems that may impact South American production.
“But we also still have record world stocks. So we could talk about a soybean surplus if South American comes in with a good crop. These things could put pressure on prices,” said Hurt.
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