SOYBEANS: Record High Acreage and Weaker Fundamentals for Soyoil
Take a Free Trial of our Daily Comments, Weekly Market Letter and more! Subscribe today or Learn More
The USDA Prospective Plantings and Quarterly Grain Stocks reports were bearish, and that coupled with the technically overbought condition of the market helped drive the soy complex sharply lower yesterday and again this morning. Strength in the US dollar and another sharp break in energy markets helped pressure as well. US soybean prospective plantings for 2022/23 came in at 90.95 million acres versus an average expectation of 88.9 million and a range of estimates from 86.0 to 93.2 million. This was up from 87.2 million last year. March 1st soybean stocks came in at 1.931 billion bushels versus an average expectation of 1.888 billion bushels (1.532-1.965 billion range), up from 1.562 billion bushels last year. If we plug the new acreage estimate into the USDA Outlook numbers and adjust beginning stocks for the 2022/23 season to 328 million bushels to reflect the higher March 31 grain stocks (instead of 285 from the last USDA report) and use the current yield estimate of 51.5 bushels per acre, US 22/23 ending stocks would come in near 308 million bushels. If yield were to match the previous record at 51.9 bushels per acre, ending stocks would increase to 349 million bushels and result in a stocks/usage ratio of 7.7%. This would be the highest ratio since the 2019/2020 season.
US soybean crushings for the month of February are expected to have reached a five-month low of 175.4 million bushels, 173.7-177.00 million range, as compared with 194.3 million bushels in January. It is still expected to be up from 164.3 million bushels last year. Oil stocks are expected at 2.518 billion pounds (2.500-2.525 range) as compared with 2.306 billion last year. The weekly export sales report showed that for the week ending March 24, net soybean sales came in at 1,305,827 tonnes for the current marketing year and 54,000 for the next marketing year for a total of 1,359,827. Cumulative soybean sales have reached 97.3% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 92.3%. Net meal sales came in at 102,968 tonnes for the current marketing year and 60,544 for the next marketing year for a total of 163,512. Net oil sales came in at 30,932 tonnes for the current marketing year and -40 for the next marketing year for a total of 30,892. Cumulative oil sales have reached 85.6% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 66.3%. Brazilian agricultural consultancy Datagro cut its estimate for the country's 2021-2022 soybean crop because of unusually dry weather in the south. Production is pegged at 125.1 million metric tons, down from its February forecast of 130.3 million tons.
MARKET IDEAS
The report news was bearish across the board, with stocks up near the high end of trade expectations and planted area above the average estimate and at a record high. July Soybean Meal has struggled since reaching a contract high on March 25, with no follow-through to the upside. The uptrend channel was violated on Monday, and the chart pattern would turn quite bearish if the market were to close below 455.50. Follow-through to the downside would leave 419.50 as the next target. It will take a close back over 469.80 to expect a resumption of the uptrend. The close under $14.47 3/4 for November Soybeans is a bearish technical development and leaves $13.73 1/2 and $13.58 1/4 as next key support levels.