Why Soybeans Will Make New Highs
Two years ago, biofuel people were saying that within 3 to 5 years, the USA would not be exporting any soybeans. All US beans would be crushed domestically. The excess meal would be exported and the oil would be used to make biodiesel and jet fuel. The US is the world’s second leading soybean producer. The adjustment needed to the world’s vegetable oil marketplace to do without US soyoil exports is, frankly, mind-boggling for those trying to figure out how the world vegetable oil S&D will look.
The FOB price paid (free on board = loaded on the transport vehicle) for US soyoil at the ports compared to South American FOB soyoil peaked at just under $400/ton in June 2021 (the 2021 contract high was made June 7th). US soyoil averaged about $270 per ton premium to South American soyoil for the period of April through August in 2021. US soyoil exports have declined so much the past two years because domestic users of soybean oil are willing to pay hundreds of dollars more per ton for the oil than foreign buyers. Is that bad? Not for a soybean producer; it is bullish.
We sent this to our clients on November 1st, 2021: