Bloomberg’s Gerson Freitas Jr reported last week that soybeans capped an eighth straight week of losses, marking the longest stretch of declines since 2006. This downturn is attributed to an outlook for record global stockpiles and a sluggish appetite for US exports. The most-active futures settled at the lowest level since December 2020 on the Chicago Board of Trade.
One of the primary factors driving the decline in soybean prices is the expectation of abundant global supplies despite adverse weather conditions affecting crops in Brazil. According to Freitas Jr., this is evident in the United States Department of Agriculture’s World Agricultural Supply and Demand Estimates report, which revealed an increase in global soybean ending stocks to 116.03 million metric tons.
Check out our daily news blog and stay update.
Furthermore, farmdoc daily‘s Joe Janzen highlighted that soybean export bids in Brazil have been notably lower than US prices, enhancing the competitiveness of Brazilian exports. This pricing difference has led to a unique situation where Brazilian soybeans are being shipped to a U.S. East Coast crusher, a deviation from the norm for this time of year.
Freitas Jr. also reported that the USDA lowered its forecast for US soybean exports in the current season due to a slow pace in sales and increased competition from Brazil. Vinicius Ito, a director at futures and options brokerage Marex, emphasized that the market remains largely bearish. However, there is speculation that the USDA's latest forecast for Brazil's output may not fully reflect the yield losses caused by drought, as reported by Ito.
In a contrasting perspective, farmers in the US have been hesitant to sell at current prices, limiting the downside. There is also speculation that the USDA's forecast for Brazil's output may not entirely capture the yield losses due to drought, as reported by Ito. Brazil's state-run forecaster Conab suggested a production estimate of about 149 million metric tons, lower than the USDA's expectations.
Check out our daily news blog and stay update.
Comments