Soybeans Rally on Tighter Balance

​The USDA has revised down its global soybean ending stock estimates and inventory estimates. This is due to adverse weather which continues to hurt supply prospects for South America. The report was mildly supportive for corn and wheat, with the global balances tightening for both.

​The USDA revised down global soybean production by 8.7mt, with major downgrades coming from Brazil (-5mt), Argentina (-1.5mt) and Paraguay (-1.8mt). This follows on from the USDA having already lowered its global production estimate by around 9.2mt last month. Taking into account the latest downgrade, the USDA has cumulatively lowered global soybean production estimates by around 21.3mt over the past 4 months. Its no surprise then, that prices have been increasing significantly over the last 4 months. Indeed, after the WASDE report, CBOT soybean futures above $16 per bushel for the first time since last June.

The USDA now forecasts global soybean production to total around 363.9mt in 2021/22, which is down from 366.2mt in 2020/21. Global soybean demand estimates were also revised down by around 5.8mt to 369.2mt, due to softer demand from China (-3mt), as higher prices are starting to bite into consumption. As a result of the latest changes, the USDA lowered its ending stocks estimate for 2021/22 by 2.4mt to 92.8mt. The market was expecting a greater revision, with expectations of ending stocks around 91mt.

For the US market, the USDA also revised down soybean inventory estimates by 25m bushels to 325m bushels, due to stronger demand. Healthy demand for soybean oil has pushed up soybean crushing in the domestic market, with domestic consumption estimates revised up from 2.31b bushels to 2.33b bushels. Domestic production and export estimates were left unchanged at around 4.44b bushels and 2.05b bushels respectively.

​Soybeans supply/demand balance
Source: USDA