Soybean quotes rose sharply despite a fairly neutral USDA report

Despite an upbeat soybean balance sheet from the USDA and a good outlook for the new crop in the US, traders increased the number of contracts as their main focus is on the soybean harvest in Argentina. July soybean futures rose 1.7% to $509.1/t on Friday (-0.3% for the month), and November futures rose 1.3% to 442, according to a report on the Chicago Stock Exchange. .5 $/t (-1.6%).

In the June report, major adjustments were made to the balance sheet for MY 2022/23, while the balance sheet for MY 2023/24 was largely unchanged.

Compared to the May estimates , the soybean balance for 2022/23 MY underwent the following changes:

• The global production forecast was reduced by 0.85 to 369.57 (359.91) million tons, in particular for Argentina – by 2 to 25 million tons (43.9 million tons in 2021/22 MY and 4.2 million tons in 2020 /21MY), while the exchange in Rosario estimates the harvest at 21.5 million tons, and the exchange in Buenos Aires – at 21 million tons, since only 19.7 million tons were threshed from 93% of the area. For Brazil, the production forecast was increased by 1 to 156 (130.5) million tons, while the local agency Conab estimates it at 154.8 million tons, and the average estimate of analysts is 155.42 million tons. It is possible that in the July balance sheet the production forecast will be adjusted again, which will lower the estimate of the final stocks
• The estimate of world consumption was reduced by 1.05 to 364.87 (363.82) million tons due to a decrease in processing volumes.
• The global export forecast was increased by 0.12 to 168.49 (154) million tons, in particular for Argentina – by 0.5 to 3.8 million tons, while the estimate for the USA was reduced by 0.4 to 54.43 million tons .
• The estimate of world ending stocks was increased by 0.28 to 101.3 (98.7) million tons, although analysts estimated them at 100.5 million tons due to a reduction in the harvest in Argentina.

At the same time , the soybean balance for the 2023/24 financial year underwent the following changes:

• The global production forecast was raised by 0.1 to 410.7 million tons without changes for the main exporters.
• The estimate of world ending reserves was increased by 0.84 to 123.34 (101.32, 98.7, 100.3) million tons, although analysts estimated them at 122 million tons.

In July, the balance may be adjusted, taking into account the data on the sowing area in the USA and the harvest in Argentina.

Traders’ attention is now focused on the weather in the US Midwest, where another heat wave with no precipitation is expected in the next 10 days, which could drastically reduce soybean crop potential.

Tags: prices, soybean