Soybeans bearish with two negative punches

By Doug Tenney, Leist Mercantile

U.S. highlights — Few changes were expected. U.S. soybean exports were lowered 35 million bushels, more than expected. The Brazil soybean production was down, but not as much as expected. 

Trade expectations: U.S. soybean exports reduced, Brazil soybean and corn production to be reduced.    

Following the noon USDA report release, corn was down 2 cents, soybeans 2 cents, and wheat  down 11 cents. Moments before the report was released, corn was down 2 cents, soybeans up 11 cents, and wheat down 13 cents.

U.S. 2023-2024 ending stocks: corn 2.172 billion bushels, last month 2.162 billion bushels; soybeans 315 million bushels, last month 280 million bushels; and wheat 658 million bushels, last month 647 million bushels. 

Trader estimates for 2023-2024 US ending stocks: corn 2.152 billion bushels; soybeans 243 million bushels; and wheat 684 million bushels. 

USDA this month estimates Brazil soybean production at 156 million tons, last month was 157 million tons. Argentina soybean production was 50 million tons, last month was 50 million tons.

Brazil corn production was estimated at 124 million tons, last month was 127 million tons. Argentina corn production was estimated at 55 million tons, last month was 55 million tons.

U.S. grain export sales have been especially disappointing for soybeans for the last two months. U.S. soybean exports to date are 1.069 billion bushels, down 23% from last year. Last year at this time, the U.S. had exported 1.4 billion bushels. Meanwhile, U.S. corn exports have been a bright spot for grain fundamentals. Corn exports to date total 641, up 147 million bushels, or 29% from last year. Last year at this time the U.S. had exports just 494 million bushels.

South America weather has been a strong feature since late October when Argentina along with southern Brazil has received numerous days of excessive rain making those regions too wet. Conversely, central and northern Brazil has been too dry. Those contrasting weather extremes has the Brazil soybean production moving lower with time. The January number was 157 million tons, the December production estimate was 161 million tons. Trader’s estimates for today were 153 million tons.

March 2024 CBOT corn has been multiple new contract lows this month, while making two new additional lows just this week. Corn currently is at a 3-year low. Producers across Ohio and the Midwest are holding above normal amounts of unsold corn in their farm bins. IRS taxes which are due this month will likely force some of that corn to move to town in the next 3 weeks to generate cash flow. 

Grains continue to suffer from a lack of fresh fundamental news. U.S. soybean export sales are not being made each week or at least several times a month. For example, the U.S. sold soybeans to China or unknown destinations on Jan. 19, while the last sale prior to that date were on Dec. 19.

Perdue Farms in the past two weeks bought 2-3 cargoes of soybeans from Brazil to be imported in the U.S. An expected arrival time for those boats has not yet been announced. Those soybean will be crushed in Perdue’s own crush facilities. 

Brazil’s soybean harvest is underway and continues to make progress. With all of the weather issues seen in Brazil for the past three months, production estimates are likely to be widely varied until harvest reaches at least 60%.

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