Fundamentally Speaking

It's been tough sledding for the soybean market since the beginning of October even though it appears that 2024 U.S. production will be quite a bit less than expected back in August.

Nonetheless the third highest yield ever along with a 3 million acre increase in planted acreage vs 2023 and a decent amount of beginning stocks ensure a more than adequate supply situation for the 2024/25 marketing year.

As for demand, the real key is exports and the soybean market has had a negative reaction to a host of bearish influences.

To start, heading into key reproductive period for the Brazilian crop, soybean growing conditions in the world's largest soybean producer and exporter are about excellent with a favorable mix of rains and sun and much can also be said about the Argentine crop so far.

Meanwhile, the possible ramifications of Donald Trump's election are being played out with the trade fearing a renewed trade war with China, the world's largest soybean importing nation, a possible curtailment of the biofuels industry under the new administration that has capped a recent rally in soybean oil, and a surging foreign exchange value of the U.S. dollar making our exports more expensive in foreign markets.

Still, after a slow start, the pace of U.S. soybean export sales has picked up in recent weeks as perhaps China is getting some beans bought ahead of possible retaliatory tariffs levied by Beijing in response to the president-elect's promise to impose 60% tariffs on a wide variety of Chinese goods.

This chart shows U.S. soybean export sales and shipments in million bushels as of the first week of November on the left-hand axis while reported on the right-hand axis are those figures as a percent of the November USDA export projection.

The figures in the yellow rectangles are the percent sold to China also as the first week in November. In the WASDE report earlier this month the USDA did lower soybean exports by 25 million bushels to 1.825 billion and the latest weekly export sales report showed total sales through the first week of November at 1.097 billion with 497.1 million sold to China and shipments at 554.1 million bushels.

The total exported is 60.1% of the current WASDE projection, above the 25-year average of 58.7% and actually the second highest figure since the 2016/17 season.

The amount shipped so far is also above the 25-year average of 23.6% and, other than the 32.9% shipped rate in the 2020/21 year, is the second highest ever.

The fact that 60% of projected soybean sales have already been sold and a superfast shipping pace would perhaps auger for an increase in the USDA projection, but as noted many unknown factors right now to make any determination.

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