Soybean Outlook
One year ago, the March ’21 soybean board was trading around $13, with projected US carryout at 175 million bushels. Now beans are trading at slightly higher values, but US potential carryout is at 340 million bushels.
There are concerns US export pace isn’t high enough to meet current USDA estimates, and upcoming reports may show carryout levels increasing even higher. Plus, Brazil’s current cash values suggest they have a 30-50 cent price advantage over US beans for shipments about a month from now when their harvest is fully underway. This may mean current price levels are not sustainable longer term.
If US export pace was reduced enough for carryout to increase to over 375 million bushels, that would be 200 million bushels (or 4 million metric tons) more than last year. While early South American estimates are predicting a reduction of 4 million metric tons, it’s important to remember that Brazil’s total production alone was projected to be 6 million metric tons more than last year only a month ago.
Therefore, for the current bean rally to remain sustainable, it will require more production issues in South America. These would include:
Further deterioration of Southern Brazil’s crop, which is nearing the end of its life cycle
Additional heavy rains in Northern Brazil to slow harvest or open pods and hurt yields
Sustained dry weather during Argentina’s upcoming growing season
The next USDA report on January 12th will provide more information on the US’s harvested yields and updated carryout values. It seems likely there will be more market volatility for the next few weeks.
Jon Scheve Superior Feed Ingredients, LLC
9358 Oak Ave Waconia, MN 55387 jon@superiorfeed.com