Price action: November soybeans fell 3 cents to $14.48 1/2, still up 36 1/4 cents for the week. December soymeal fell $4.90 to $429.60, while December soyoil rose 166 points to 65.96 cents.
5-day outlook: Soybean futures fell a fourth consecutive day but still posted solid gains this week after USDA released lower than expected crop and yield estimates Sept 12. The soy complex ended the week on a soft note and may face further pressure next week with harvest pressure increasing and Midwest weather trending warmer. Mostly favorable conditions for crop maturation and early harvesting will continue during the next two weeks, World Weather Inc. said today. USDA will update crop condition and progress reports Monday. Earlier this week, USDA said 22% of the U.S. soybean crop was dropping leaves as of Sept. 11, behind the 28% five-year average.
30-day outlook: Traders will closely follow early harvest results, as well as bearish-leaning outside markets, including crude oil, U.S. equities and the U.S. dollar. Recession concerns ramped up this week, sending the S&P 500 index to a two-month low and crude oil lower as well. Further declines in those markets may prompt large speculators to cut long exposure in soybeans and other ag markets. A strong start to soybean exports in 2022-23, if it continues may support prices over the near-term, but increasing competition from Argentina may limit upside. Other key factors include USDA’s Grain Stocks Report Sept. 30 and Crop Production update Oct. 12.
90-day outlook: USDA’s Crop Production Report Nov. 9, the agency’s final harvest update of the calendar year, will be one key to longer-term price direction. November soybeans erased some of the post-USDA rally early this week but still posted the market’s first weekly gain in three, illustrating the market’s longer-term bullish potential with U.S. ending stocks projected at a seven-year low. We expect the ultimate size of the crop to be revised even lower. While we’re keeping our average U.S. yield estimate at 51.7 bu. per acre, USDA’s 580,000-acre reduction in harvested area led us to lower our crop forecast by 56 million bu. to 4.479 billion bu. But escalating recession concerns and a higher 2022-23 production outlook for South America could limit price upside.
Export demand and South America’s upcoming crop season will also be closely watched. The U.S. Climate Prediction Center now gives 54% chances La Niña will persist through the January-March timeframe, and there are slightly greater than two-third odds of ENSO-neutral conditions during late spring/early summer 2023. “The longer La Niña lingers, the higher the potential will be for another less-than-ideal South America growing season,” World Weather Inc. said.
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