Already depressed due to large U.S. supplies, a projected strong South American crop and a volatile U.S. dollar, soybean prices could face even more pressure from high prospected planting numbers expected from USDA on Tuesday. Once the planting and stocks reports are released, it could be “opening the gates at a horse race,” says one commodity market analyst.
May 2015 soybean futures closed down more than 6¢ at $9.68 per bushel. November ended the week at $9.49, also down about 6¢. The market is down by about 50¢ since March 1. More disheartening is the fact that November beans are down from more than $12 last May.
Unless the 2014 crop is lower than was estimated, large soybean stocks will continue to pressure prices, says Bryce Knorr, senior editor of Farm Futures, sister publication to Corn+Soybean Digest. In addition, Farm Futures is estimating more soybean acres this year than USDA or other trade projections.
“Attention is shifting to the March 31 USDA planting report,” Knorr says. “Analysts surveyed by Bloomberg, on average expects 88.87 million corn acres and 85.95 million soybeans. USDA's February estimates were 89 and 83.5, respectively. Farm Futures predicts 88.34 million corn and 87.3 million soybeans.”
The shaky dollar value is also causing price volatility, Knorr says, “It would be hard to push soybeans higher with South America harvesting a big crop and the dollar turning higher,” he says. “Argentina said this week better-than-expected yields in some areas should offset reductions in flood-damaged areas.” There are estimates that about 500,000 acres have been flooded in Argentina, where harvest is about 4% complete.
Good export numbers may be helping hold prices steady. Brugler Marketing & Management says net sales reported for both old and new crop soybeans were 726,000 metric tons, including more than a half million MT of fresh old-crop booking. That was after trade estimates for the weekly USDA Export Sales report had been in the 200,000 to 450,000 MT range.
Knorr says active farmer selling of old-crop corn and soybeans during recent price rallies filled market channels. “Basis bids in export markets weakened as grain became available, rivers opened and barges moved downstream,” he says.
Look for more aggressive trading next week after the crop reports, says Scott J. Harms of Archer Financial Services, via InsideFutures.com. “It will be similar to the opening the gates at a horse race next week when the USDA releases the stocks and acreage Report on Tuesday,” Harms says
“The marketing window will officially begin. Sure, producers should have had a marketing plan in place well before March 31st and likely have some sales already in place.
“However, the enthusiasm surrounding marketing grain production over the past several months has been muted by prices hanging at or below expected costs of production, or simply providing less than desirable returns.”