Soybean crop estimate down; market falls on weather forecast

A USDA report delivered at noon Friday had very little in the way of new fundamental news for the soybean market, but futures fell after the news.

The seeded area for 2020 was nudged slightly higher, due to an adjustment for the June 30 acreage report when the USDA slightly raised its seeded area estimate to 83 million acres. In June, the government had been using an estimate of 82.8 million acres.

With slightly more acres, the USDA bumped up its forecast of 2020 US soybean production by a minor 10 million bu from last month, to 4.135 billion bu.

At 49.8 bu/acre, the average expected 2020 soybean yield was unchanged from last month and still based on averages from past years. The USDA will provide its first survey-based yield estimate in August.

In the meantime, traders will shift their yield forecasts with each weather forecast. Some analysts were about to lower their yield expectations, but a weather forecast released about the same time as the USDA report on Friday boosted the amount of moisture expected for the US Midwest the coming weekend.

The forecast for more than expected rain sent traders scurrying to exit their long positions. Losses were limited by forecasts for a build-up in heat.

The usage forecast for the 2020-21 marketing year was raised slightly by the USDA, to account for a slightly greater soybean crush.

Ending stocks for 2020-21 are now projected at 425 million bu, up from 395 million a month ago.

Of note, the ending stocks forecast is still down considerably from the ending stocks level for 2019-20 (the current marketing year) of 620 million bu. The forecast is also way down from the 2018-19 ending stocks of 909 million bu.

Nov beans ended the day down 10 ¾ cents at US$8.90 ¾ per bushel.

Source: DePutter Publishing Ltd.

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