Soybeans Reach 8-Month High
- Price move comes despite USDA’s August production forecast of 4,425 million bushels, 873 million bushels above last year.
- China has increased US soybean purchases as supplies dwindled in South America.
- US crop ratings have dropped over the last month as dry conditions have persisted in the western Corn Belt.
- Reports of increased prevent plant and the derecho storm have increased uncertainty regarding harvestable acres.
- Rain in the forecast following this weekend would be timely if they verify, and help fill out the bean crop.
- Brazil is forecast to increase production by nearly 10% this coming season as record profitability drives increased planting.
- Overnight, Brazil temporarily removed its import tariff for soybeans, prompting the market to wonder if the major exporter is oversold.
FBN’s Take On What It Means: The U.S. export window likely closes in January as potentially record supplies from Brazil come online. The recent price rally looks like a pricing opportunity for new crop soybeans, especially if production is not as bad as feared and nears USDA forecast levels. Please consult with your FMA!
French Wheat Exports Down
- Agritel forecasts French exports will be almost 40% lower in the 2020/21 marketing year.
- The consultants forecast France's 2020 harvest at 29.22 million tonnes, down from 39.5 million last year.
- Soft wheat exports this year are projected down to 13 million tonnes from 20.9 million tonnes in 2019/20
- Exports outside of Europe could be down from a record 13.5 million tonnes to 6.3 million this season.
- Shipments to China are forecast at 1.15 million tonnes in 2020/21, compared to a record 1.6 million tonnes last year.
- Agritel projects exports to Algeria at 2.6 million tonnes, down sharply from 5.6 million in 2019/20
FBN’s Take On What It Means: Algeria, France's largest export market, purchased Baltic wheat in its last tender as French prices were not competitive. They also face competition from Poland and Germany, which have better harvest prospects. It’s also unlikely France will be competitive in selling to Egypt, as offers from Russia and Ukraine have continued to win that business. The US has an outside chance to gain some exports, but would need lower prices to gain that advantage.
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