Soybean

Brazil will surpass the United States as the largest producer of soybeans this year, taking over the top ranking for the first time in history. The U.S. is expected to harvest 116.48 million tons of soybeans later on in 2018, falling short of Brazil’s estimated collection of 117 million tons for its crop year that is just drawing to a close. Brazil, already the world’s largest soybean exporter, is expected to expand this lead in the coming years thanks to its unique ability to expand planted area.

China’s soybean imports from October 2018 to September 2019 are expected to edge down from a year earlier due to increased output and slower consumption growth. China is predicted to import 95.65 million tons of soybeans in the period, down 0.3 percent year-on-year. Soybean output in the country is expected to grow 4.9 percent year-on-year to 15.27 million tons, as subsidies will encourage farmers to expand planting. Meanwhile, falling pork prices will slow down the demand growth for soymeal as feed. Between October 2017 and September 2018, soybean output is predicted to grow 12.4 percent year-on-year to 14.55 million tons. China’s soybean imports totaled 95.53 million tons in 2017, the highest worldwide.

Soybean contracts rose marginally because of short covering and overnight gains in the bellwether contracts on the CBOT. The most active June contract on the NCDEX was up 21 rupees at 3,739 rupees per 100 kg. Benchmark Indore market was close today because of Amavasya. In Akola, another key market of the oilseed, prices were up. Reports of a possible hike in the import duty on sunflower oil, mustard oil, soyoil and canola oil are also creating positive sentiments.

Soybean contracts were down on NCDEX tracking weakness in the bellwether contracts on CBOT. The most-active June contract of soybean was down 0.5%. Soybean contracts on CBOT were down due to expectations of higher acreage under the oilseed this season. In the benchmark market of Indore, price of the commodity was unchanged. Lower arrivals of the oilseed in local markets are seen limiting the fall in domestic prices amid sluggish demand. Arrivals of soybean were down.

Madhya Pradesh, the top producer of soybean, is likely to face a shortage of over 15,700 tn certified seeds in 2018-19 (Jul-Jun) kharif season due to patchy monsoon rains last year. less soybean seeds available with the state agencies for sowing in upcoming kharif season. A shortfall of 15,700 tn certified seeds will lead to a fall in acreage of 157,000 ha. The shortage in certified soybean seeds is way higher than the Centre’s estimate of 9,300 tn for the country, against a requirement of 290,976 tn. Madhya Pradesh requires over 50% of around 1.1 mln tn of certified and non-certified soybean seeds in the country.

Soybean futures are trading 3 to 4 cents higher. Sharp losses of 16 to 18 1/2 cents in the front months, as traders took money off the table going into the weekend. July lost 3.23% for the week. Soy meal was $7.80/ton lower, with front month soy oil up 19 points. Aggressive farmer selling in Brazil has been reported, with strong domestic prices recently. Spec funds were net long 127,042 bean contracts, down 50,005 contracts from the previous week. The USDA updated their old crop US soybean cash average price to $9.35, with the new crop midpoint at $10.00. Canola stocks in Canada at the end of March rose 14.4% from last year to 9.077 MMT, the second largest March total recorded.

Soybeans found the biggest initial lift, trading 10 to 11 cents higher minutes after the report was out, on news that USDA expects new crop ending stocks to be much smaller than expected.

They closed with most contracts 5 to 7 cents higher. Soy meal was up $1.30/ton, with front month soy oil 11 points in the red. Supply and Demand report from the USDA saw a 20 mbu increase to the US soybean crush number, which reduced ending stocks. Initial projections show a 415 mbu carryout for 18/19 on larger exports and smaller production. New crop stocks for the world are projected at 96.7 MMT and would be 5.5 MMT lower yr/yr. The US accounts for a majority of the reduction in new crop world endings stocks at 86.7 MMT. Data from China’s Ag Ministry shows that they expect total imports of soybeans to be slightly reduced in 18/19 to 95.65 MMT. USDA has them at 97 MMT for old crop and 103 MMT for 2018/19.

With the threat of tariffs and counter-tariffs between Washington and Beijing looming, Chinese buyers are canceling orders for U.S. soybeans, trend that could deal a blow to American farmers if it continues.

Soybean futures are currently 4 to 5 cents higher after being 1 to 4 cents in the red. Preliminary open interest rose 9,265 contracts, with net new selling concentrated in August and November. Soy meal was up 50 cents/ton, with front month soy oil 38 points higher. The trade ideas for old crop soybean sales in this morning’s USDA report are running 300,000 to 600,000 MT in the week that ended 5/3. New crop is seen at 100,000-300,000 MT. Soy meal sales are projected at 100,000-400,000 MT with bean oil sales at 15,000-60,000 MT. For the WASDE report, world soybean ending stocks for 17/18 are estimated 0.9 MMT lower at 89.9 MMT. Analysts are expecting the USDA’s initial 2018/19 world carryout projection at 91.2 MMT, a slight increase from 17/18. Brazilian analyst Celeres is putting the soybean crop there at 117.8 MMT.

Prices of soybean in Indore rose because of lower supplies and tracking gains in the oilseed contracts on CBOT. The most active May soybean futures were up 1.3%. However, the arrivals are lower on an average weekly basis.

Repeated rains that fall on Argentina’s main agricultural region weeks ago are hampering the 2017/18 soy harvest, which could have an impact on grain production that has already suffered hard cuts by a drought that extended throughout the austral summer. Excessive moisture could reduce soybean yields by 5 to 15 percent, and cause a 30 percent drop in its price because, because of the weather, the pods are opening early or the Grains are germinating within them. Some sources speak of a soybean production of 37, 38 million tons, and that the effect of the rains could be between 1, 1.5 million less.

For many reasons, Brazilian exports of soybeans to China are surging. First, following a record soybean crop of 4.19 billion bushels in 2016/17, Brazilian soybean ending stocks reached a record-high of approximately 940 million bushels. Then, Brazilian soybean farmers are expected to top that record with a crop of 4.23 billion bushels for the 2017/18 marketing year. Given two back-to-back record harvests, and record-large inventory levels, the increase in Brazilian soybean exports was no surprise. For the 2017/18 marketing year, Brazilian soybean exports are projected at a record-high 2.7 billion bushels, marking the eighth consecutive year of record soybean exports. Meanwhile, following back-to-back record soybean crops in the U.S., soybean exports are projected to fall 5 percent in 2017/18 to 2.1 billion bushels. Due to reduced export volumes, U.S. soybean ending stocks are projected at 550 million bushels.

China’s April soybean imports fell 13.7 percent from the same month a year earlier to 6.9 million tonnes. The decline came in the same month that Beijing threatened to slap an additional 25 percent import duty on soybeans from the United States in an ongoing trade war between the world’s top two economies. China imports 60 percent of the oilseed traded worldwide to make meal for its massive livestock herd, with about a third of its imports typically from the United States.

Madhya Pradesh is targeting soybean production of 5.5 mln tn in 2018-19 (Jul-Jun), up from 5.3 mln tn produced in the previous year. The state, the top grower of soybean in the country, harvested a smaller crop in 2017-18 because of patchy monsoon in some parts of central India. A rise in acreage may also result in higher crop output this year. Farmers, who had moved to coarse grains in 2017-18 following low rains, are expected to return to soybean this year.

Futures contracts of components of the edible oil basket rose on domestic exchanges. The most-active May contract of soybean on the National Commodity and Derivatives Exchange rose over 1%, in line with gains in key contracts on Chicago Board of Trade. Soybean prices on the Chicago exchange rose following reports of delay in sowing due to rains in key growing regions in the US.

Futures contracts of components in the edible oil basket traded mixed on domestic exchanges. While soybean and mustard declined, refined soyoil rose and crude palm oil traded largely flat. The most-active May contract of soybean on the National Commodity and Derivatives Exchange were 0.2% lower. Soybean declined on the Chicago exchange as trade talks between the US and China were inconclusive. Imposition of tariffs would hit soybean imports by China and drag down prices of the commodity. Forecast of normal monsoon rains and shortage of soybean seed dragged down prices.

Soybean futures are trading 5 to 6 cents higher this morning in a little Turnaround reaction. They finished Monday with 19 to 25 1/4 cents losses in the front months. Pressure from meal and profit taking ahead of Thursday’s USDA report pressured prices lower. Soy meal was down $9.60/ton, with front month soy oil up 11 points. A plunge in the Argentine peso hurt US meal values by making exports less competitive. The USDA indicated that 533,667 MT of soybeans were shipped for the week that ended 5/3. That was down 22.89% from a week ago but 43.79% larger than this time last year. Soybean planting progress was shown 15% complete by the USDA on Monday afternoon. That was 10% more than last week and is now ahead of the average pace by 2%.

With monsoon expected to be normal this year and returns in soybean seen better, acreage of the oilseed is likely to rise 10% on year to around 11.5 mln ha in the 2018-19 (Jul-Jun) kharif season. At present, prices of soybean are around 20% above minimum support price in key markets in the country. It will encourage farmers to sow more soybean this year. The official’s sowing projection was the highest among the 13 respondents at 14.0-15.0 mln ha for 2018-19, against 11.0 mln ha estimated this year. Farmers had switched to other crops for better returns in 2017-18 and in next kharif they are most likely to come back to soybean. Growers in Madhya Pradesh are also expected to switch to soybean from jowar and minor grains like kodo and kutki. Meanwhile, prices of most kharif crops are ruling below their minimum support price in key markets that would further encourage farmers to opt for soybean.

Production of soybean breeder seeds has halved to around 1,050 tn in 2017-18 (Jul-Jun) because of unfavourable weather. Small crop due to patchy monsoon rains in 2017-18 resulted in lower production of breeder seed. Against the requirement of 2,050 tn, produced just 1,050 tn.