With November 2015 soybean futures closing below $9.50 per bushel on Friday, impacts of world production, exports and expectations for more U.S. soybean acres were much apparent.
Once again, every quote on the CME Group soybean board was below $10; not a good sign for farmers eager to catch some sort of rally to make some early-season sales. March futures hit $10.60 in early January, but closed down about $1 below that at $9.61 on Friday. Overall, March lost 62.5 cents in January, 6.1% of its value, says Bryce Knorr, senior editor, Farm Futures.
Slow export sales won’t help matters much. John Newton, University of Illinois ag economist, says that for the remainder of the marketing year, “the pace of soybean exports is expected to slow considerably as the South American crop comes on.”
In his analysis of export activity in regards to USDA’s recent WASDE export projections of 1.77 billion bushes, Newton says that to reach that level, “it's implied that 458 million bushels of soybeans need to be exported during the remainder of the marketing year.”
Newton notes that for the week of Jan. 22, 55.9 million bushels of soybeans were exported, in line with the prior week, but down 26% from the 10-week average. Still, “cumulative soybean exports for the 2014-2015 marketing year total 1.31 billion bushels, up 18% from 2013-2014 marketing year,” he says.
More rain across dry parts of south-central Brazil on Thursday reinforced local estimates that forecast Brazil’s production close to USDA's current projection of 3.5 billion bushels, Knorr says.
“That's threatening to overwhelm the world with soybeans,” he says, even though Brazil's crop could be 50 million to 100 million bushels smaller than previous estimates. “But world stocks are big, so that may not make much of a difference, especially with growers gearing up for a big increase in 2015 acreage.”
Knorr says soybean basis remained firm across the Midwest last week, with the break in futures providing no incentive for farmers to move anything but already contracted shipments.
Still, basis is minus-50¢ to well below minus-$1 in many areas. That doesn’t create much excitement among growers, since soybeans below $9, or even $10, are below most cost of production levels.