Similar to what happened in the corn market, the Sept. 30 USDA Grain Stocks report surprised the soybean market with some somewhat positive numbers.
“We had a similar surprise on soybeans as with corn, and we had a similar surprise in soybean stocks,” said Ed Usset, professor emeritus and grain marketing economist with the University of Minnesota. “Soybean stocks are way up from a year ago – no surprise there – but, in fact, they’re less than what the trade expected. The trade was expecting just under a billion bushels of soybean stocks and USDA came in at 913 million bushels.”
That total is up 108 percent from last year, but below the range of projections that came out prior to the report. Traders had expected USDA’s estimate to fall within 940 MB and 1.001 billion bushels.
According to the report, on-farm stocks totaled 265 MB, which was up 162 percent from a year ago, while stocks in off-farm locations totaled 648 MB. The report also indicated that disappearance for the June-August period totaled 870 MB, up 11 percent from the same time last year.
USDA also revised soybean production down by 116 MB from its previous estimate, with planted area down to 89.2 million acres and harvested acreage declining to 87.6 million acres. The national average yield estimate was also revised down 1 bushel per acre to 50.6 bushels per acre.
Usset called the report “a modest surprise,” adding that the bean market had been up as much as 20 cents, and was up in the high teens as he gave this report on Sept. 30.
“We needed a good surprise,” he said.
One thing Usset said he wouldn’t be surprised about is if the market has seen its harvest lows in soybeans already.
“I’m just looking at no soybeans and they got down to $8.50 a bushel at its lowest of lows on Sept. 9, and here we are 50 cents higher, trading at $9,” he said, while also adding a word of caution. “Keep your horns trimmed, don’t get all bullish,” he said. “But we may have seen our harvest lows.”
At one local elevator in west central Minnesota regularly followed in this column, as of Sept. 30 the cash price for soybeans was $7.96 and basis was $1 under. May 2020 cash price was listed at $8.36 and basis was 95 cents under.
On another positive note, Usset pointed out that the U.S. is going to be shipping about 60,000 metric tons of soybeans to China, which will be loaded out of the Pacific Northwest port. But so far, it’s just this sale.
“It all looks good, it’s a nice amount,” he said, but added he’s unsure of where negotiations are between the two countries as no agreement has been reached in the trade war between the U.S. and China.
“I’m in a Missouri state of mind concerning trade,” Usset said, explaining that Missouri’s state motto is “the show me state.”
“They’re skeptical about things, so they say ‘show me, don’t tell me.’ That’s where I am with soybeans,” he continued. “I like this sale, and apparently there’s going to be some negotiations, but we’ve been down this road half a dozen times in the last year, so I don’t know if it leads to anything or not. We’ll find out.
“I need to have concrete proof. I don’t want to read a tweet or see a White House report that says we’re close, we’ve heard that before. I want to see a deal. That’s my ‘show me’ state of mind,” he added.
Looking ahead to harvest, Usset said he’s anticipating a smaller crop this year – as indicated in the USDA report – due in large part to all the issues farmers faced this year with getting a late start to planting and then getting ample moisture and not very warm weather.
“We were too wet at planting and we really don’t need to be too wet at harvest, but here we are and we’re awfully wet and that’s not a good lead-in to corn or soybean harvest,” he said. “The rains are a big deal in terms of soybean and corn harvest, and soybeans would be first. Things are getting delayed and we don’t need delays. We don’t need a wet crop.”