The U.S. soybean planting pace is slower than expected

The U.S. soybean planting pace is slower than expected, but the weather forecast is enough to support the market this week.

The five-day forecast shows almost no rain for the Dakotas, Nebraska, Iowa, Minnesota, and the northern half of Illinois. While rains were active last week, parts of the Dakotas did not receive ample amounts, and this could start a dry-down of soils.

The six- to 10-day forecast shows hot weather for the Dakotas and northern Corn Belt with precipitation expected to be normal to below normal. The eight- to 14-day models are similar.

There is not much room for error for the new crop season.

Even if U.S. soybean planted area increases to 88.5 million acres, if yield is the same as last year, ending stocks could come in around 133 million bushels and result in a stocks/usage ratio of 3.0%, up from 2.6% for 2020/21 but the second lowest since 2013/14 and historically tight. If the yield comes in at the five-year average, ending stocks could drop to 107 million bushels with a 2.4% stocks/usage, which would be the tightest on record going back to at least 1964. This emphasizes the need for a record yield.  

Brazilian government agencies are warning of drought, with indications of the worst dry spell in 91 years. Some areas are declaring a state of water scarcity.

November soybean futures pushed to their highest level since May 14 yesterday. For the weekly Crop Progress Report, traders had expected to see soybean plantings around 87% complete (85% to 89% range). Instead, they were 84% complete. This was up 10% from last year and 17% from the 10-year average but below the range of estimates. Of the top producing states, Illinois was 89% complete, Iowa 93%, Minnesota 99%, North Dakota 88%, and Indiana 86%.

U.S. soybean crush for April was 169.85 million bushels, which was below the low end of pre-report estimates (range 170.00 to 173.00 million). The daily crush pace was 5.66 million bushels per day vs. an average of 5.57 million for the month of April. U.S. soybean oil stocks on April 30 came in at 2.178 billion pounds vs. an average pre-report estimate of 2.171 billion and a range of 2.150 to 2.200 billion.

U.S. soybean export inspections for the week ending May 27 came in at 192,221 tonnes, which was within trade expectations calling for 90,000 to 400,000. Cumulative inspections for 2020/21 have reached 56,437,429 tonnes, 58.9% above a year ago. Inspections have reached 91.0% of the USDA’s forecast for the marketing year vs. a five-year average of 79.6%.

Argentine farmers have sold 20 million tonnes of soy from the 2020/21 season, with 606,000 tonnes registered over the past week, according to the Agriculture Ministry. The soybean harvest is expected to be 43.5 million tonnes according to the Buenos Aires Grains Exchange, vs. 49 million tonnes in 2019/20. Sales for 2021/22 soy have reached 616,100 tonnes, almost double the amount registered on the same date last year, the ministry reported. India’s May vegetable oil imports spiked 148% to a record $1.4 billion.

MARKET IDEAS

Look for support in November soybeans at $13.93½ and $13.77½, with $14.09 1/4 as resistance. A close above resistance would suggest a resumption of the uptrend, with $15.12½ as a long-term target. December Meal support comes in at $390.10, with resistance at $409.00. Clearing resistance would leave $447.90 as the next upside target.

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