Global soybean trade has slowed in recent weeks. While trade had been matching last year’s strong pace earlier in the year, June trade volumes are estimated to fall 3.6 million tons below last year.
With China demand a major driver, the weakening export pace can be attributed to a softening in China purchases. Soybean stocks in China, already at high levels, continue to grow as earlier imports exceeded the monthly crush pace.
Large pork supplies have dragged pig prices lower, reducing feed margins and lowering soybean meal demand at least in the short term. With large soybean supplies on hand, and markets offering lower prices for shipments in the last quarter of the year, lower global soybean shipments are expected over the next three months and prior to the U.S. harvest.
While this led to the lower export forecasts for Brazil and Argentina this month for the 2020/21 Oct/Sep trade year, it also portends higher available supplies for export from South America in the latter half of 2021.
Larger availability in South America for the October-December period would normally cut U.S. exports and pressure U.S. prices lower. However, price levels later in the year will depend more on actual U.S. soybean yields and production.
Market volatility has been high as markets react to acreage projections and weather models much more than weak global demand.
Over the last 30 days, contract prices have ranged nearly $1.00/bushel either side of current quotes. Prices declined roughly $2.00/bushel from early June as rain soaked parts of the Corn Belt, only to give back much of the decline on limited acreage gains reported in the June USDA Acreage report.
But with weather models showing more rain for some of the drier regions of the upper Midwest, November contract prices quickly shaved 80 cents/bushel off these highs, settling near $13.20/bushel on July 9. This is about 50 cents/bushel below the August contract.
Read the full USDA report here.
