Soybean prices have traded in a wide range over the past two months, but fundamental developments have been less dramatic than in the wheat and corn markets.
The third report to provide supply information will be the USDA’s Oct. 8 Crop Production report. In addition to providing a new forecast of yields, that report will also reflect administrative acreage information, primarily certified planted acreage data from the Farm Service Agency.
“Prospects for export demand for the 2010 U.S. crop will depend heavily on the strength of Chinese demand and the size of the 2011 South American crop,” Good said.
Currently, the USDA projects that China will import 1.91 billion bushels from all sources during the 2010-11 marketing year, up from 1.82 billion during the year just ended. Although the 2011 South American crop is expected to be smaller than the huge 2010 crop, large inventories of the 2010 crop will keep supplies large and perhaps allow South America to capture more of the Chinese market, he said.
However, U.S. export sales for the 2010-11 marketing year have started very strong, he said. “As of Aug. 26, the USDA reported sales for delivery during the current marketing year at 562.7 million bushels. New-crop sales a year ago totaled 516.1 million bushels. Nearly 60 percent of current outstanding sales are to China. Progress of the South American crop will become very important over the next few months as the developing La Niña weather pattern becomes important for the southern hemisphere,” he said.
Soybean futures prices remain above $10, resulting in cash prices at or above the upper end of the USDA’s projected range for the marketing year average price. Relatively high prices and a small carry in the futures market make harvest sales attractive for a portion of the crop, the economist noted.