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USDA Data Pressures Soybean Market Thursday

World crop numbers bigger than expected.

In its March Supply/Demand report, the USDA sees global soybean production rising, while U.S. soybean exports slow. As a result, the market dropped.

At the close, the May corn futures settled 5¼¢ lower at $3.67, while December futures finished 4¼¢ lower at $3.88.

May soybean futures closed 10¾¢ lower at $10.11. November soybean futures ended 5¾¢ lower at $10.04½.

March17World

May wheat futures closed 3¢ lower at $4.44.

May soy meal futures finished $2.60 per short ton lower at $328.50. May soy oil futures closed $0.43 lower at 33.11¢ per pound. 

In the outside markets, the Brent crude oil market is $1.23 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 51 points lower.

Trade Response

Most analysts are not surprised that the report came out as market-negative.

Jason Ward, Northstar Commodity Investment grain analyst, says that the report showed the same old story for the grain markets, more production and more demand, but more production continues to offset that increasing demand.

“This leaves the grain markets stuck in the same old ranges, or maybe lower ranges. We do think producers and traders will be hard-pressed to build large sales or short positions before the U.S. growing season, but if you are keeping score, the cushion for yield adversity just got a little softer with these widespread production increases,” Ward says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the big increases in Brazil production appear to be the headlines for the report. 

“The soybean estimate is higher than Brazil’s CONAB, the government agency, and that is wild,” Scoville says. “The U.S. data shows better-than-expected demand for corn but unchanged ending stocks, which I can’t figure out.”

USDA cut export demand, due to the Brazil numbers, and soybeans are down. 

“Market noting the increases in South American production and sensing a lot of competition for sales, and these ideas are probably warranted,” Scoville says.

Mike North, president, Commodity Risk Management Group, says that as expected, world supplies were the thing to watch in this month’s WASDE release. 

Corn ending stocks grew by 3 MMT, while soybean stocks were lifted 2.5 MMT.  In combination with the decline in U.S. soybean exports, soybeans felt pressure following the updated numbers. The U.S. corn balance sheet was left unchanged in terms of ending stocks with 50 million bushels moving from feed to ethanol. Wheat also saw global balance sheets rise, with Australia the major contributor,” North says.

Jason Roose, U.S. Commodities grain analyst, says that the focus on today’s USDA crop report was that the U.S. export pace was slowing down in corn and soybeans. “And, Brazil corn and soybean crops are much larger than expected,” Roose says.

Sal Gilbertie, Teucrium Trading owner, says that the story of today’s report is pretty straightforward; record global production of corn, wheat, and soybeans is being absorbed by record global demand, with a slight production surplus resulting in minimal gains to inventories and minimal price declines postreport.

“The slight gains to global grain inventories are keeping consumer prices in check for now, but the multibillion-dollar question is, “How many years in a row can the world’s farmers continue to meet continuous year-over-year record global demand increases for grains?” Brazil is having a fantastic production year, but China is using record amounts of beans, India is using record amounts of wheat, and U.S. ethanol producers are using record amounts of corn; global production levels for the coming crop year need to stay high to meet seemingly insatiable global demand,” Gilbertie says.

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