Positive Weather Impact on US Soybean Crop
The weather in the United States has been favorable for soybean crop development, contributing to the lowest soybean prices since the end of 2020. Despite the positive growing conditions, low export rates due to high competition from South American sellers have put downward pressure on prices.
Crop Progress and Condition
According to the National Agricultural Statistics Service (NASS) Crop Progress report, 44% of US soybeans have already formed pods, which is 4% above the five-year average. Although the percentage of soybeans in good or excellent condition dropped by 1% to 67% over the past week, it remains significantly higher than last year’s 52%.
Export Challenges
Data from the Marketing Service Group (MSG) indicates that the US exported 42.76 million tons of soybeans in the fiscal year 2023/24 as of July 25. This represents a 15.3% decrease compared to the previous season. To meet the USDA’s projected export total of 46.3 million tons, the US would need to ship an additional 700,000 tons in the next five weeks, which is unlikely.
Market Sentiment and Futures
The Commodity Futures Trading Commission’s (CFTC) weekly report shows that hedge funds have reduced their net short position in soybeans from a record 185,660 to 163,569 contracts. Additionally, their net long position decreased from 81,262 to 49,610 contracts, reflecting traders’ pessimism about potential price increases in the coming months.
November soybean futures in Chicago fell by 3.8% over the last two sessions, settling at $382 per ton. This marks a 2.9% decline for the week, a 6.7% drop for the month, and a 20% decrease for the year.
Oil Market Pressures
The oil market has also been under pressure, with September oil futures falling by 3.3% to a seven-week low of $79.8 per barrel over two sessions. This represents an 8.7% decline for the month, driven by forecasts of reduced global demand.
Economic Concerns in China
China, the world’s second-largest consumer of crude oil, reported its slowest GDP growth in five quarters during the second quarter, raising concerns about a further contraction in the country’s energy demand.
Ukrainian Market Trends
In Ukraine, export prices for new harvest soybeans have followed global trends, decreasing to $355-370 per ton for delivery to Black Sea ports. Last year, prices at the beginning of the season ranged from $410 to $440 per ton. Traders are hesitant to sell as some soybean crops in the central and eastern regions suffer from heat and moisture shortages, which could reduce yields.
The current market dynamics highlight the complexity of the global soybean market. Favorable weather conditions in the US are contributing to a robust crop, but increased competition from South America and economic concerns in major markets like China are driving prices down. Additionally, the situation in Ukraine underscores the challenges faced by farmers due to adverse weather conditions. As the season progresses, stakeholders will need to navigate these multifaceted issues to optimize their strategies and outcomes in the soybean market.