Can Soybeans Trade Back To $13 Or Will They Continue To Slide Lower?

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Market Commentary for 11/5/21

Bean Outlook

On Tuesday January beans closed at their highest value since the October USDA report. Then the market dropped 50 cents in three days, ending the week at the same value it traded a day after the October USDA report.

Can Beans Rally?

There are several factors that make a bean rally difficult right now. One, harvest reports suggest the US bean crop is bigger than previously estimated. So, the trade is awaiting next week’s USDA report to determine by how much. Two, the Brazilian crop was planted quickly with adequate moisture. Combine that with large acres expected to be grown there, and the trade suspects US beans will have a lot of southern hemisphere competition by Valentine’s Day.

On the other hand, crushers are making healthy margins, which should keep a strong bid under the market and be a positive for beans. Also, on Friday the USDA released their 10-year long-term projection report that showed only a modest increase of 300,000 bean acres estimated to be planted next spring. This is less than what some market participants are currently expecting given high fertilizer prices. Additionally, this particular USDA report suggested that demand could remain steady compared to what is posted today.

Bean Competition

Canola prices have more than doubled in the last year due to drought conditions in the main growing regions of North Dakota and Canada. Sunflowers globally have been affected by dry weather as well, which is causing price rallies for that crop too. Both crops are direct competitors to beans, which should mean more demand pull on beans moving forward, especially with this week’s price drop.

Looking Forward

Brazil’s bean crop hasn’t even entered the stage where moisture is critical to crop development. It will be another month until timely rain will have a much bigger impact on bean yields. And with that more opportunities will come for weather scares and price volatility.

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