(Minnesota Farm Guide) – Soybean traders weren’t sure what to expect following the release of the Feb. 10 USDA World Agricultural Supply & Demand Estimates report.
Over the course of five days, though, traders took soybean futures contracts significantly higher due to strong soybean demand.
In the report, the USDA reported an increase in U.S. soybean supplies by 5 million bushels on higher projected imports from Canada. U.S. 2013 soybean exports were increased by 15 million bushels to 1.51 billion bushels.
Residual use of soybeans in the U.S. was decreased by 10 million bushels, so ending stocks for the 2013 crop were left unchanged at 150 million bushels.
The reduction in residual use was “a little bit of a surprise there, as our domestic demand has been really pretty strong throughout as well,” said Jack Scoville, the Price Futures Group vice president and futures market analyst, with offices in Chicago.
“All in all, probably the fact that they didn’t lower the ending stocks has created some selling,” he said.
Scoville spoke to farm reporters via the Minneapolis Grain Exchange monthly crop call on Feb. 10, but then prices began moving higher.
As of Feb. 14, the CME Group soybean futures contracts were trading with March at $13.38, May at $13.255, July at $13.08, August at $12.59, September at $11.82 and November 2014 at $11.31 per bushel.
Compared with prices back on Jan. 31, the March contract was 54 cents higher, May was 56.5 cents higher, July was 56 cents higher, August was 49 cents higher, September was 37 cents higher, and November was 26 cents higher.
Commercial and spread buying were leading to renewed confidence in the soybean market.
The USDA’s export report on Feb. 13 reported soybean net sales of 173,600 metric tons – just 6.38 million bushels. The sales reduction was a result of cancellations from China, as well as changes from unknown destinations to China.
Export sales reached 105 percent of the USDA’s forecast compared with a five-year average of 83 percent by this point in the marketing year.
Additional sales of 122,600 metric tons (4.5 million bushels) were noted for the 2014 soybean crop.
“Looking ahead to the soy complex, we’re going to be looking directly at Brazil and Argentina staring us right in the face,” he said. “Even though we’ve been talking a little bit about hot and dry weather in eastern Brazil, which has been happening, there are some forecasts for rain to come in.”
He pointed out that dry weather also allows South American farmers to harvest and transport soybeans.
As of Feb. 14, cash soybeans at one west central Minnesota elevator followed in this column were $12.70 per bushel, with a basis of 55 cents under. Compared with a price of $12.15 on Jan. 31, the price was 55 cents higher, and the basis had narrowed by 5 cents.
Soybean traders were looking toward the USDA Outlook Report and baseline projections for U.S. 2014 crop production. That report will be released at 7 a.m. on Feb. 21.
“There are a whole lot of reports that could start to turn the market pretty soon,” he said. “We’ll find out a little bit more down the road.”
Early indications are that U.S. farmers intend to plant more soybeans in 2014. The demand appears strong for soybeans, and prices remain respectable.
“We’re going to see a lot of acreage this year, because of all of the Prevent Planting in 2013 – and the release of some of the Conservation Reserve Program acres into production, as well,” he said. “I think we have a chance to see increases with both, but I think the producer is more than happy to produce soybeans. I think he feels like he has a little better chance for a better price, because he’s struggling to make money with the corn market this year.”
