Soybean commentary: Futures rebound despite higher USDA stocks forecast

Soybean front-month July futures on the Chicago Mercantile Exchange (CME) rebounded on Friday May 10 with support from soybean oil and despite estimates of ample offer and ending stocks for the 2024-25 crop in the latest World Agricultural Supply and Demand Estimates (WASDE) report

The front-month July soybean futures contract rose by 0.54%, or 6.4 cents per bushel, to $12.15 per bushel at the time of publication, following the 4.4% increase in soy meal futures.

External markets limited soybean gains, with crude prices falling by 1.14% day on day and the US Dollar Index virtually flat.

The USDA’s WASDE report pegged global 2024-25 soybean ending stocks at 128.5 million tonnes, up by 16.7 million tonnes from 111.78 million tonnes in the previous crop year and above the average market estimate of 124 million tonnes.

Global production was pegged at 422.26 million tonnes for 2024-25, up from the previous crop year’s 396.9 million tonnes, mainly due to expected higher soybean production from South America, the US and South Africa.

Weather impacts on soybean harvest

In Brazil, more rain was expected to hit the state of Rio Grande do Sul over the weekend, and research firm AgResource projected losses due to floods at 1.32 million tonnes of soybeans.

The loss in soybean crops due to the floods in Rio Grande do Sul may vary from 20% to 100% in areas not harvested before heavy rain hit Brazil’s southernmost state, a report by state agency Emater/RS said on Thursday May 9.

Brazilian veg oils industry association Abiove has raised its 2023-24 soybean production estimates to 153.9 million tonnes from 153.8 million tonnes previously.

In Argentina, a drop in temperatures and a break from the rain should allow early soybean harvest to end next week in the country’s core agricultural area (zona nucleo), the Rosario Grains Exchange (BCR) said in its weekly publication late on Thursday.

BCR’s estimates for soybean production were unchanged at 50 million tonnes, above last year’s 20 million tonnes, a report showed late on Wednesday May 8.

Argentina’s soybean harvest made good progress in the week to Wednesday, while corn harvest slowed, the Buenos Aires Grains Exchange (BAGE) said in its weekly crop report update on Thursday.

Soybean trade activity and prices

China’s agriculture outlook committee (CAOC) has lowered its forecast for the country’s soybean imports and consumption in 2023/24 while maintaining its production outlook, according to the Chinese Agricultural Supply and Demand Estimates (CASDE) report released on Friday.

Brazil exported 14.7 million tonnes of soybeans in April, up slightly year on year, while the country’s soymeal shipments remained at a very strong pace, a Fastmarkets analysis of official customs data showed.

In Brazil’s Paranaguá paper market, June-loading contracts were assessed at a premium of 13 cents per bushel to the CME July futures contract, down by 2 cents per bushel from Thursday.

In the US, the June-loading FOB Gulf price was assessed at 52 cents per bushel over CME July futures, stable day on day, and the FOB Pacific Northwest price assessment was unchanged at 138 cents per bushel over the same underlying contract.

The June-loading contract on the FOB Argentina market was still assessed at a discount of 12 cents per bushel to the CME July futures contract.

Soybean futures and premiums

In China – the world’s main destination market – soybean products futures on the Dalian Commodity Exchange ended the week in negative territory amid bearish sentiment ahead of Friday’s CASDE and WASDE reports.

The most-liquid September soyoil contract fell by 1.66% day on day to 7,570 yuan ($1,048) per tonne, while the equivalent soymeal contract dipped by 1.34% to 3,523 yuan per tonne.

Soymeal sales in the Chinese domestic market fell again, with 111,500 tonnes reported sold for spot delivery.

In the physical market, premiums for near-term cargoes out of Brazil were a bit higher, although not enough to offset the sharp drop in futures prices.

Sales were reported for June shipment overnight at premiums of 139-140 cents per bushel over the CME July soybean contract, for June-July shipment at premiums of 144-145 cents per bushel, and for July at 153-155 cents per bu over the same underlying contract.

September cargoes were assessed lower, with offers emerging at premiums of 209 cents per bushel to November CME futures.

Premiums for new crop cargoes were stable, with February 2025 offers reported at premiums of 93-105 cents per bushel to March CME futures and March offers at a premium of 65-74 cents per bushel to March futures.

Fastmarkets Agriculture’s APM-6 China Soybean Marker for June shipment of the cheapest option was up by 1 cent per bushel, assessed at 140 cents per bushel over July futures, equivalent to $496 per tonne on an outright basis.

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