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Soybean futures take hit on higher stocks

Soybean futures take hit on higher stocks

Soybeans with pods close up

A higher than expected supply number in the latest USDA quarterly stocks report took its toll on the soybean market to close out September. However, the market digested those numbers quickly and is back to focusing on the ongoing harvest in the Midwest.

As of Sept. 1, soybean stocks were at 256 million bushels, according to the Sept. 30 release, which was 82 million bushels above the average trade guess. With demand largely staying the same, the downturn in prices was to be expected, but markets aren’t likely to trade on that news for long.

“That was a pretty bad negative shock to the market,” Jack Scoville of Price Futures Group said. “It really hasn’t increased any actual soybean availability for whatever reason. It doesn’t feel like the markets are getting blown away with availability now. That’s helping the market rein it in.”

While soybeans were hit initially with more than 20-cent losses in the futures market, it did help end users as Scoville noted this was a good opportunity for them to price out product after the dip in prices.

The report provided some support to the corn market, coming in just slightly above analyst estimates, and wheat markets surged after USDA numbers were below analyst estimates.

“The corn market is acting really firm and has some demand,” Scoville said. “It doesn’t really feel like we have a whole lot of availability in that market, and the wheat was just flat-out bullish.”

Harvest pressure is expected to hit the grain markets in the coming weeks as yield reports start to come in, Scoville said. With prices still “good,” Scoville said it will be interesting to see how farmers handle the crop they didn’t forward market this year.

“A lot of them sold early last year but got burned for it,” he said. “I think there will be some selling this year, but it might not be as big as many people think.”

Internationally the U.S. and China are engaging once again as the U.S. is looking to enforce more of the Phase One trade deal with China. However, Scoville said this shouldn’t affect markets quite yet as it’s mostly just words at this point with no action.

“I think you have to wait and see,” he said. “Just because the U.S. is saying they aren’t in compliance, they are still buying right along. (China) is going to buy what they need.”

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