Soybean futures showed technical indicators earlier this week that a near term low may be in place.

After plunging lower on Tuesday morning (following the crude oil collapse) the nearby May contract hit a price low of $8.08-1/4, near that critical $8.00 support level. Soybean prices quickly found buying interest at those lower levels and finished the day in positive price territory.

Should futures prices be able to hold that strength into Friday’s close, we may actually see a bullish weekly reversal on charts which would be a very strong technical signal that a seasonal low is indeed in place. If a seasonal low truly is forming, it is doing so impressively on little additional friendly fundamental news.

No spring planting delays

So far, there are no major planting delays occurring in the United States. Planting progress is off to an average start with Monday’s weekly crop progress indicating soybeans are 2% planted, which is normal for this week of spring. 

Additional progress is being made across the Midwest this week with little weather issues holding farmers back. Also, many in the industry feel that more acres of soybeans will be planted this spring than what was forecast by the USDA at the end of March. The March Planting Intentions report suggested that U.S. soybean growers would plant 83.5 million acres in 2020, up 10% from last year. If realized this will be the third highest planted acreage on record. With the recent drop in corn prices, some feel intended planted acres for corn may get switched to soybeans instead. Some in the industry feel that planted soybean acres might be closer to 84.5 or 85 million acres.

Lackluster soybean exports

The recent export pace of U.S. soybeans continues to lag. Brazil continues to win Chinese export business.

The reality is that the high value of the U.S. Dollar versus the extreme discount of the Brazilian currency keeps Brazil soybeans at a substantial price discount to American soybeans.

The United States exported 2.76 million tonnes of soybeans in February, the fewest for that month since 2004. March final export totals might be even worse for U.S. soybeans with current estimate totals only around 2 million tonnes. Collective year-to-date soybean export inspections (what has actually left the country) are near 33 million metric tonnes. This is at 68% of the USDA’s forecast for the 2019-20 marketing year, versus the five year average of 78%.

Will China show up soon with a major purchase to take advantage of the recent historic low prices?

Soybean meal demand is phenomenal

Like soybean futures, the soymeal futures posted positive technical indicators on daily charts suggesting that a near term low may be in place. The most recent NOPA soybean crush numbers showed that a record 181.6 million bushels of soybeans were used last month! This is a huge number, topping the pre-report estimate of 175.2M bushels and was a new monthly record for soybean crush (the previous record was 176.94M bushels set just this past January).

Soybean meal demand is likely going to continue to be strong for two reasons: lack of DDG’s available to feed to livestock as ethanol plants closed, and with many packer plants closed due to COVID-19, cattle and hogs not getting slaughtered will continue needing more feed until plants re-open.

Trade may have a few twists and turns in the coming days and weeks as May options expire on Friday, and first notice day for May futures is on the 30^th of this month. Should any new export demand occur for the United States soybeans, soybean futures might have a nice jump in prices.

Reach Naomi Blohm: 800-334-9779 and [email protected]

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