The fact that China has made some purchases of U.S. soybeans is a positive sign to the market, but whether or not China will be able to live up to its agreement in Phase One of the trade deal is still unknown at this time given the ongoing coronavirus pandemic and the effect it is having on the world’s economies.

The market has been encouraged by a good amount of soybean demand over the first couple weeks of May, a lot more than anticipated, according to Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D.

“We are starting to see a return of China to the U.S. market as the Brazilian real continues to be very cheap,” Martinson said. “Part of the reason why I think we’re seeing some of this demand is China is now starting to prime the pump to start switching their demand source away from South America to the U.S.

“We’re seeing a little bit more pressure politically, as well, for China to come and start paying more attention to the U.S. to buy products because they’re a quarter of the way in the marketing year and China has only bought 9 percent of the dollar commitment that they made in the Phase One trade deal,” he continued. “There’s going to be more political pressure on China in general to push them into buying more from the U.S. to try to get that trade deal accomplished.”

Martinson also said there are some rumors of trouble as far as trade with China is concerned because of the political fallout from the coronavirus and the blame that the Trump Administration is putting on China for the spreading of the virus and the possibility that the U.S. may retaliate by putting tariffs on China as a means of punishing them for the lack of transparency and the way they have handled the coronavirus spreading.

“That has been kind of the trouble that has been hitting the soybean market and the idea that if we start getting trade tensions with China again they’re going to step away,” he said. “”But they have been buying from the U.S., and they’ve been buying fairly aggressively over the last couple weeks.”

Planting progress is another factor the market is watching, and thus far, soybean planting is ahead, though not as far ahead as with corn.

“A lot of producers have been focusing more on getting the corn planted and not so much soybeans,” he said. “That scenario could flip though as we go into the next couple weeks. For the most part, this cold weather we saw over the weekend (May 9-10) and early part of (last) week has likely caused some damage to the soybeans and there will likely have to be some replanting of soybeans going forward. But it doesn’t look like it’s going to be that bad at this point.

The May 12 WASDE (World Agricultural Supply and Demand Estimate) report from USDA for the May crop production estimate does not look to be as bearish on the soybean side as it is on the corn side because of the lower acres, Martinson noted. However, he felt it does look like that the soybean numbers should be somewhat positive in this report.

“There seems to be some switching of numbers up here in the Northern Plains, but there’s going to be other crops besides soybeans that producers go to,” he said. “One will be prevented plant, others will be sunflowers, dry edible beans, and soybeans will be the market that most will migrate to, but right now it does look like soybeans have a little bit of light at the end of the tunnel.

“We’re seeing demand pick up and the production estimate should be somewhat friendly going forward, at least short-term here.”

The 2020-21 outlook for U.S. soybeans is for higher supplies, crush, exports, and lower ending stocks compared to 2019-20, according to the report. The soybean crop is projected at 4.125 billion bushels (BB), up 568 million from last year on increased harvested area and trend yields. Despite lower beginning stocks, soybean supplies are projected up 5 percent from 2019-20 to 4.720 BB.

Looking at local prices, soybeans are around $7.70 cash. At one local elevator in west central Minnesota regularly followed in this column, as of May 12, the May cash price for soybeans was $7.95 and basis was -56 cents under. The July 2020 futures price was listed at $8.56 and basis was -3 cents under.

“Soybeans is more of a backseat to corn. Corn is the one that is getting most of the attention right now,” he said.