Soybean Prices To Stay Low Despite Strong Consumption

August 8, 2018 04:39 PM
 
Between the anticipation of high soybean yields, and the current trade spat, soybean prices have yet to rebound from a nosedive this spring. However, soybean crush and exports over the past two months show increased use.

Between the anticipation of high soybean yields, and the current trade spat, soybean prices have yet to rebound from a nosedive this spring. However, soybean crush and exports over the past two months show increased use.

Trade disputes with China led to a 25% tariff by China on U.S. soybean imports, dropping soybean prices for U.S. farmers, says Todd Hubbs, University of Illinois ag economist. “Concurrently, soybean prices in Brazil strengthened as China focused on Brazilian soybeans for demand needs.”

The U.S. found alternate countries for soybeans, too. In June, export numbers from the Census Bureau showed exports up 54 million bu. over last year. Mexico is up six million bu., Netherlands up 11.5 million bu. and Pakistan is up 14.5 million bu. 

“A continuation of export strength to other markets than China is key to the prospects for exports in the 2018, 2019 marketing year under the current escalating trade situation,” Hubbs says. USDA export projections this marketing year are at 2.085 billion bu., with 1.961 billion bu. through Aug. 2.

To meet USDA export estimates, soybean exports need to average 18.2 million bu. per week over the next month, and they’ve averaged 27.8 million bu. the past four weeks. 

“The current pace of exports appears to be on track to meet and possibly exceed USDA projection,” Hubbs says. Soybean crush continues to show strength, too, namely with the drought in Argentina.

USDA projects 2.03 million bu. of crush for the 2017, 2018 marketing year. 

Despite soybean consumption, the potential for a large soybean yield this year is helping keep prices down. As of the most recent Crop Progress report from USDA, 70% of soybeans are rated good to excellent. Time will tell what actual yields are, namely for states in drought conditions.

“In total, 15% of soybean acreage is currently experiencing drought conditions,” Hubbs says. “While the current USDA yield projection for the 2018 crop year is at 48.5 bu. per acre, the likelihood of a higher soybean yield projection in the August 10 crop production report is increasing due to the excellent condition of the crop in many key growing areas.”

Hubbs is forecasting the national soybean yield to jump to 50.3 bu. per acre. The potential for high yields in both the U.S. and South America, combined with trade uncertainty will likely continue to keep soybean prices under pressure despite consumption.

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Comments

 
Spell Check

Deena
Vegas, CA
8/9/2018 04:22 AM
 

  On the contrary, the soybean price on the other parts of the world has been rising due to the trade war and weather conditions. With higher soybean demand from China and insufficient supply for domestic demand, there is a sharp rise in price for soybeans from Brazil and Argentina. I guess that leaves US soybeans more attractive choice. Soybean price in China itself has also went up, making tofu expensive, as well. Source: http://bit.ly/2Oo7hHo

 
 
Rick
Jonesboro , AR
8/8/2018 05:10 PM
 

  As I've tried to tell these people with TDS, the main problem isn't the trade battle with China but the continued overproduction by US farmers. Fence row to fence row production just isn't needed at this time! Times are different and 50 bushel per acre national soybean yields will be the norm going forward!

 
 
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