A day after USDA showed declining crop conditions for the U.S. soybean crop, September soybean future skyrocketed, closing 43 cents higher on the day. Concerns over crop conditions were just one of the reasons soybean futures found strength.
High heat and weather forecasts helped fuel the price spike on Tuesday. On Monday, USDA showed soybean conditions dropped 1 percentage point in the latest Crop Progress Report, now sitting at 56% good to excellent. The decline in ratings came a week after soybean conditions dropped 3 percentage points.
It’s not just supply, as traders were also keeping a close eye on demand. USDA confirmed another private sale of U.S. soybeans to China. Earlier this month, China also had a string of daily soybean sales. The added demand helped soybean prices see the highest gains, on a percentage basis, in nearly two months.
“My biggest concern was how soft would soybean demand be this fall from China, and particularly concerned about what October demand would be,” Arlan Suderman of StoneX Group told AgriTalk’s Chip Flory Tuesday. “We felt like they had enough in reserves at the crushering plant and what was on the water coming from Brazil to get them through September.”
Suderman says October was a concern due to the possibility of shipments from Brazil continuing to enter China, and what that would mean for U.S. soybean demand.
“I know they don’t like the ocean freight rates right now, and they’d like to wait to buy more,” Suderman told Flory. “But we have seen them come in with some very active, not only buying lately, but they’re loading out the newly harvested soybeans out of the Delta, we’re getting good quality there. They’re loading out. And that’ll be for delivery in end of September, first of October arrival. That tells me that’s a good sign that demand is going to be good going into October. That’s very encouraging to me.”
Soybean oil prices also helped support soybean futures Tuesday, with soy oil gaining 3% on the day.
Arlan Suderman will join Farm Journal Field Days for a marketing discussion and live taping of U.S. Farm Report on Friday, August 27 in Colby, Kansas. You can still register for the in-person and/or virtual event here.
