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Outlook for soybeans a little brighter than for corn

Soybean

With harvest complete and current strong demand, the outlook for the soybean market looks to be a little brighter than it is for corn.

“Soybeans have a little bit better outlook, which is kind of surprising,” said Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D. “Production is going to be fairly decent, probably average or maybe a little below the trend line yields. But what we’re looking at is strong demand and that’s really helping to keep that soybean market firm.”

Martin noted the U.S. has been seeing good buying coming out of China, as well as Spain and unknowns, the three big buyers of late, “so we’re holding demand, which has been pretty good.”

Also, crush margins at U.S. plants continue to be outstanding because there’s a strong demand for the oil, largely because of the issues in the palm oil market.

“That in itself is also adding and helping to support the soybeans,” he said.

There are other concerns the market is watching including the fact Argentina is having issues because of the dry conditions. As of early November, Argentine farmers had just 5 percent of their crop planted, which is way behind the normal planting pace of 50 percent planted at this time.

Also in South America, Brazil’s producers are doing “okay” with their planting, but conditions there have been a little wet and there are concerns about the wet conditions and how it may delay planting.

The other factor which could have a major impact going forward is the election and the change in the presidency in Brazil.

“It’s likely we’re not going to see an expansion of acres for the next four years because the new president-elect, Luiz Inacio Lula da Silva, is not a friend to agriculture and he likely will stop deforestation and the expansion of tearing up land, and so that will be a positive moving forward,” Martinson said.

Another item the market is watching is that China recently has been hinting about lifting some of its restrictions on COVID. Although China decided not to at this point, they’re talking about it, which is friendly to the market and that could open up and cause a huge increase in demand in the short-term, Martinson pointed out.

On the demand side, he noted that U.S. soybean exports have been good.

“We’ve actually seen the highest amount of shipments and the second-highest amount of shipments in the last couple weeks for soybeans. So our shipments have been extremely strong and our sales have been good and that is helping to put some support into the market,” he said.

China has been the bigger buyer and it’s likely they will continue, especially if they’re talking about opening up and reducing some of their COVID restrictions.

“Their demand is going to continue to spike higher, so that’s something the market is watching going forward,” he said.

The low water level of the Mississippi River and the trouble getting barges down the river to the Gulf is also helping the soybean market tremendously.

“Our basis levels are at or better than our five-year averages at harvest time for soybeans,” he said. “Because we can’t ship much out of the Gulf, a lot of it has to go to the PNW (Pacific Northwest) right now, so the basis levels have been extremely strong up here in the north to try and bring those bushels into the Northern Plains to get them on the trains to get them out to the PNW for export.”

And so basis on soybeans is pretty strong right now.

“Like corn, where we haven’t been able to get above that $7 level, for beans it was that $14 level,” he said. “But now we got above it, so that’s become support and now we have some potential to see beans try to pass the next level of resistance, which would be that $14.85 level.”

Looking at local prices, at one elevator in western Minnesota regularly followed in this column, as of Nov. 7, the November delivery price was $14.57 per bushel and basis was zero. The February 2023 futures price was listed at $14.65 and basis was -4 cents under.

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