Keeping track of soybean prices
THE months of May and June are critical for US soybean planting as fears of unfavourable weather is detrimental to the soybean crop, having substantial impact in crop yield in the end.
As of June 2, 2017, the progress of US soybean plantings was at 83 per cent, which is well above the five-year average at 79 per cent, according to figures from the US Department of Agriculture ( USDA). In 2017, CBOT soybean prices have been under pressure as worries over the record US dollar planting and bumper crop in South America have created ample world supplies which to some extent is expected to exceed global consumption.
Prices reacted to this news like roller- coaster. Prices swung to the high of US$ 10.925 per bushel on January 18 and slid all the way to a low of US$ 9.095 on May 31.
Woes over the US record planting and bumper crop in South America pushed soybean prices off its high of US$ 10 per bushel at the end of March.
Additional price pressure on soybean came on May 18 following a sudden sharp depreciation of the Brazillian real in one day, arising from political chaos sending shockwaves to market.
The weakening real made Brazilian soybean much more competitive in international market, as lesser real is paid to producers but higher domestic soybean prices are quoted in US dollars.
Hence, soybean selling is expected to pick up on the back of the given record production.
Despite the recent rebound from a 14-month low, the forecast for a warmer and drier weather in the US is expected to add support and limiting rallies, along with the ample South American soy supplies and expectations for record-large US plantings.
Noticeably, the recent additional purchases from Chinese imports of soybeans are likely to keep imports at a high level in subsequent months.
However, according to Oil World, China is expected to build soybean stocks, picking the recent cheaper soybean while getting ready for possible supply disruptions and higher prices at a later stage. On the other hand, a previously announced threeday nationwide wage strike was delayed by Argentine grains inspectors union.
The focus now will be over this weekend, awaiting outcomes from the negotiation that will be the determinant of the possible upcoming 72-hour strike that may tentatively put on the show on June 13, said URGARA trade union in a statement.
With any work stoppage, it will slow down the pace of logistics and impact prices.
Moving forward, what is the next to watch are the strike in Argentina, Brazilian currency move, US weather that will be the key determinants of the farmer selling levels.