Farm Progress

The big question is what the U.S. average yield of soybeans will be this fall.

Kevin Van Trump, Founder

July 13, 2018

2 Min Read
20-Year Soybean Chart: As you can see we are approaching major support around the $7.50 area. In fact we haven't traded sub-$7.50 per bushel since the Spring of 2007.

Soybeans are able to rally back a bit following yesterdays updated USDA data. The numbers themselves were initially viewed as bearish, but as I suspected, a short-covering rally gave the market a bit of a lift. I'm just not sure there will be enough "short-covering" to keep prices moving higher for an extended period.

Here at home, the USDA showed old-crop ending stocks were lowered from 505 million down to 465 million bushels. As both "crush" and "export" demand were raised higher. The bad news is, new-crop ending stocks jumped from 385 million to 580 million. The two biggest headwinds were the fact new-crop "exports" were lowered by -250 million as the USDA considers trade tariffs into their equation.

The other headwind is that "harvested acres" jumped from 88.2 to 88.9 million. Globally, Brazil soybean production was bumped higher to a new record of 119.5 MMTs. Brazils new-crop estimate jumped from 118.0 MMTs to 120.5 MMTs. Argentine soybean production for next year raised from 56 to 57 MMTs. Keep in mind their production this past year was only 33 MMTs.

World soybean production for new-crop was raised from 355.24 MMTs to 359.49 MMTs. Interestingly, total global 2018/19 oilseed production was forecast down -1.4 million tons to 592.6 million on lower rapeseed and sunflower production. Rapeseed production is reduced -2.6 million tons with lower production for the EU, Australia, Ukraine, and Russia. Rapeseed production was also lowered for Germany and the UK on persistent dryness while production is lowered for France on pest pressure.

Sunflower seed production is down -2.9 million tons mainly for Russia and Ukraine on lower yields from dry conditions.

Bottom-line, the bulls can't be too overly excited to see U.S. new-crop ending stocks forecast at 580 million bushels with the soybean yields staying "unchanged" at 48.5 bushels per acre. Bears believe the U.S. average yield should be higher, closer to 50 bushels per acre. Which means, if all things stay equal with demand, we would be adding +130 million bushels to production and ultimately ending stocks. I can't imagine bulls wanting to run aggressively into a +700 million bushel ending stock number.

As both a producer and a spec I remain extremely patient.



About the Author(s)

Kevin Van Trump


Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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