US soybean futures prices hit a four-year high due to lower yield expectations, weak currency, export optimism and weather concerns in South America, market sources told S&P Global Platts Nov. 5.
CBOT November soybean futures prices were trading at $11.03/bu at 11 am on Nov. 5.
The US soybean yield for the 2020-21 marketing year (September-August) is expected to be revised down in the upcoming Department of Agriculture's November supply and demand report, which signals a further decline in the soybean output forecast.
According to the October WASDE report, US soybean's 2020-21 yield is forecast at 51.9 bu/acre. However, some agricultural consultancies expect the yield to go down as low as 50.8 bu/acre in the upcoming Nov. 10 report.
As a result, the US soybean-production forecast is seen declining further for 2020-21 to fall below 116 million mt, a decrease of 4 million mt on initial estimates, signaling further tightness in supplies.
With US election results continuing to be unclear and the prospects of Republicans stifling any stimulus package authorized by the Biden administration, the US dollar fell 0.81% to a two-week low against a basket of currencies to 92.66 on Nov. 4.
A weak national currency is seen as a boost to an already heated US soybean export market as the beans become cheaper in international markets.
For the 2020-21 marketing year, US soybean export inspection volumes, as of the week ending Oct. 29, were seen at 16.6 million mt, compared with 9.5 million mt a year ago, with the majority of the shipment destined for China, the world's largest raw beans importer.
China has be ramping up US soybeans partially due to its Phase 1 commitments and partially because of robust demand for soybean-based pig feed in the Asian nation's rapidly consolidation pork industry, a Beijing-based agricultural consultancy said.
The 2020-21 forecasts for soybean crush and soybean meal feed use are both higher than the USDA' Foreign Agricultural Services China estimate for 2019-20 based on a growing sow inventory and the increasing share of large-scale operations in the swine sector, the USDA attaché report said Nov. 3.
According to a Chinese government survey, the sow inventory has reached 80% of its pre-African Swine Fever levels.
The soy crush for 2020-21 in China is forecast at 95 million mt compared to 90 million mt the previous year, while soybean meal feed use is projected to reach 73 million mt this marketing year, a 4 million mt increase over the FAS China estimate for 2019-20, the USDA said.
WEATHER CONCERNS IN SOUTH AMERICA
La Niña-induced weather concerns in Argentina and Brazil during the soy planting season has further stoked limited supply fears in the market, thereby supporting the US beans prices.
While Argentina is almost certain to experience drought in the coming months, the southern region of Brazil is also expected to be impacted by La Niña and receive minimal rainfall in coming weeks.
Brazilian soybean planting has been off to the slowest start in a decade. However, recent rains have accelerated the sowing process, there is a very good possibility of irregular rains going forward based on different weather models by state authorities.
The soybeans crop requires ample rainfall during its development and pod-filling stages. Irregularity in rains could hamper the crop's yield and lower the overall productivity.
If the soybean output projections for the two South American nations decline, US soybeans prices can be well supported until the first quarter of 2021.
According to the analysts, if the current trend of tight supply and high demand continues, the US soybeans futures prices could hover around $11/bu level in coming days.
