Strength In Soybeans Being Driven by Census Numbers, South American Dryness

Soybeans have rebounded from a dip in the market at the beginning of the week and have broken into $11 territory.

One of the biggest reasons for this surge of strength is from census numbers that were released this week.

“When we look at the census numbers on exports for September, 286 million bushels of soybeans left the United States—that’s 50 million bushels more than what USDA had in their numbers,” said Karl Setzer of Agrivisor.

USDA’s weekly export loadings numbers only looks at loadings in the Gulf, so it doesn’t include rail or truck movements. Setzer said this is the reason for that discrepancy, but those numbers would show up in census data at month’s end.

In October’s World Agricultural Supply and Demand Estimates (WASDE) report, USDA had a projected soybean carryout of 290 million bushels. Setzer said based on this census data on exports, that number falls 50 million bushels. The next report will be issued November 10.

“There are thoughts that our soybean yield could be cut up to one bushel per acre for the U.S.,” he said. “That doesn’t seem like a lot, but that’s likely going to take another 70 million bushels off our carryout down to 170 million bushels.”

Setzer said soybean crush has been strong—so strong that numbers could be increased to 20 million bushels. That could put U.S. soybean carryout numbers to around 150 million bushels in either the December or January reports.

“If that number is correct and we are cutting our soybean stocks, that means we need to ration the January, March, May a little bit—that’s why we’re seeing this run up in values,” said Setzer. “We’re also starting to see more strength in next year’s soybeans.”

The strong demand picture remains at the forefront, but the weather in South America continues to be a factor for U.S. markets. There were a lot of concerns with the pace of soybean planting in Brazil because of the dry weather. Setzer said they are now on pace to plant 2.5 to 3 million acres per day.

“For now, it’s about 45 percent—Brazil has caught up on its planting pace,” said Setzer. “As they’re getting crops planted in the northern part of the country, they’re starting to get south where it’s a bit drier and starting to not get as much in the ground. There’s already concerns over what it’s done to the crops that’s already been planted in Argentina.”

This weather situation is starting to build risk management in the Southern hemisphere because there might be a shift in acres because soybean planting is happening late in the season.

“We’re trying to manage that risk if there’s a loss down there, and that’s bringing more buyers to the U.S. market,” said Setzer. “It’s also driven the global commodity values higher and that’s been a big plus for us too.”

Setzer talks more about how the U.S. is the cheapest shop in town for grains and how the uncertainty of the presidential election is impacting the markets in his full comments in the player above.

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