Price action: March soybeans fell 14 3/4 cents to $11.88 1/2, a near eight-month-low close and lost 20 3/4 cents on the week. March Soymeal fell $4.90 to $356.80 but gained $7.80 from a week ago. March soyoil fell 87 points to 44.73 cents and lost 220 points week-over-week.
5-day outlook: Soybean futures extended Thursday’s losses, eliminating early-week gains in their entirety, as demand woes and fresh South American supplies limited buying. Meanwhile, after spending the week mostly subdued, a surging U.S. dollar added insult to injury to future demand prospects. The dollar caught a bid following much-stronger-than-expected data in the Labor Department’s U.S. Jobs Report, indicating the U.S. economy is seemingly adapting to elevated interest rates. Traders will continue to monitor dollar movement next week, along with South American weather. Brazil’s weather outlook is mostly favorable into next week, though rains in southern Brazil, Paraguay and Argentina have been minimal and combined with hot temps in areas, which has increased crop stress in areas. World Weather Inc. reports relief late next week and into the following weekend is being consistently predicted for the most affected areas of Argentina, though confidence remains low because of the presence of high pressure in various locations across the continent.
30-day outlook: In the next month, traders will begin to prepare for USDA’s Prospective Plantings Report at the end of March. The report has a historical tendency to set the stage for increased market volatility, oftentimes due to last minute acreage bids as producers begin to sow their crops amid the arrival of spring across the U.S. As such, mother nature will dictate planting and crop conditions henceforth.
South American production will also have an increased focus over the next month as traders attempt to grasp soybean production in Brazil following a shaky start to the season. South American crop consultant Dr. Michael Cordonnier estimates Brazilian production at 149 MMT but notes a neutral-to-lower bias going forward due to disappointing yields across the country. Cordonnier also left his Argentine soybean estimate unchanged at 52 MMT, noting a neutral bias going forward amid increasing concerns of persisting hot, dry weather as the crop enters its reproduction phase.
90-day outlook: U.S. exports have proven lackluster, which is likely to persist as fresh South American supplies hit the world market at a bargain price. Earlier in the week, Agricensus reported three Brazilian soybean cargoes were traded a week ago to a U.S. East Coast crusher, in what is an atypical movement for this time of year. While it isn’t unusual for East Coast purchases to be made, they typically occur around May. The transaction was largely attributed to the unusual presence of heavy discounts for physical Brazilian soybeans versus Chicago soybeans, which reflects how well-supplied much of the world’s agriculture complex currently is. A further indication of heavy discounts for Brazilian supplies was indicated in USDA’s weekly export sales data for the week ended Jan. 25, which showed U.S. sales a marketing-year low of 164,500 MT. Net sales were down 71% from the previous week and 64% from the four-week average.
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