The USDA reports released this week were bullish on soybeans, but according to Chip Flory and Brian Grete on the Pro Farmer Profit Briefing, a portion of the report indicated potential for downward price pressure ahead.
“We got the planted acreage numbers we expected,” Flory says. “The surprise came on the demand side.”
Flory says there was a much bigger usage estimate than most people anticipated on the report, which resulted in a new-crop carryover estimates 100 million bushels lower than the trade expected.
The question now, according to Grete, is whether or not the market can sustain that usage pace, particularly at these higher price levels.
Flory says no, based on USDA’s own price estimates.
“The price range USDA reported was $8.35 to $9.85,” Flory explains. “While that is a wide range, the midpoint is $9.10, so all that demand is based on $9.10.”
Grete agrees those numbers could indicate downward price movement for soybeans in the future. “You look at where we are at price-wise,” he explains. “Even with a wide basis, you’re above $9.10, so that suggests USDA sees a period of lower prices moving forward.”
Watch the full Profit Briefing below: