Soybeans: Mixed Rain Forecast but More Damage for Next Week
With talk that the Brazilian soybean crop may be down as much as 13 million tonnes from the USDA estimate, and a very intense and stressful week ahead for the Argentine soybean crop, the market could be facing a significant tightening in world ending stocks. If we assume that Argentine production falls 4 million tonnes from the USDA estimate, world ending stocks could drop to just 85 million tonnes as compared with 103.78 million tonnes last year. This would be the lowest stocks since the 2015/16 season with a world stocks/usage at the lowest since the 2012/13 season. Record high soybean prices were hit in August of 2012. There is plenty of rain in the 8-14 day forecast models for southern Brazil and Argentina, but the next seven days still looks very dry, and traders are now talking about significant heat which could cause significant deterioration to the crop before the rain hits. Since mid-December, a large part of Argentina's main growing area has experienced dry conditions and temperatures are now beginning to increase. A wide area of maximum temperatures near 40 degrees Celsius (104 degrees Fahrenheit) could significantly stress Argentine corn and soybean crops. Traders now see 1/2 to 2 inches of rain late next week which could ease crop concerns.
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For the January USDA supply/demand update, traders see soybean ending stocks at 353 million bushels, 305-411 range, as compared with 340 million bushels in the December update. Traders see soybean production at 4.434 billion bushels, 4.396-4.484 range, as compared with 4.425 billion bushels in the December report. World soybean ending stocks are expected near 99.7 million tons, 95.0-103.6 range, as compared with 102 million in last month's update. For the December 1 stocks report, traders see soybean stocks near 3.128 billion bushels, 2.975-3.227 range, as compared with 2.947 billion last year. For the report, traders see Brazil production down about 2 1/2 million tons and Argentina production down less than a million tons from the last update.
The weekly export sales report showed that for the week ending December 30, net soybean sales came in at 382,669 tonnes for the current marketing year and 67,100 for the next marketing year for a total of 449,769. Traders expected sales near 400,000-1.3 million tonnes. Cumulative soybean sales have reached 74.7% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 75.7%. Net meal sales came in at 31,459 tonnes for the current marketing year and 323 for the next marketing year for a total of 31,782. Meal sales were expected near 25,000-250,000 tonnes. Cumulative meal sales have reached 47.6% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 49.6%. Net oil sales came in at 2,907 tonnes for the current marketing year and 119 for the next marketing year for a total of 3,026. Traders expected sales anywhere between zero and 35,000 tonnes. Cumulative oil sales have reached 77.3% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 43.6%. The Buenos Aires Grains Exchange sees Argentina's soybean plantings as of January 6th at 86.8% complete as compared with 81.4% the previous week.
TODAY'S MARKET IDEAS
With the tightening world stocks situation and a significant weather threat for the next week, the market looks vulnerable to a further advance. March soybean support is at 1372 1/2 and 1356, with 1403 1/2 and 1410 as next resistance. March meal support is at 405.20, with 421.50 as next upside target. March soybean oil support is at 57.80, with 63.29 as next target.
