Market movers to watch this spring and beyond

May 2, 2024 | Kriss Nelson

Planting depths, populations and soil conditions are all at the top of farmers’ minds. What about marketing the crop being planted?

Mac Marshall, vice president of market intelligence for the United Soybean Board, says these

market signals are critical to farmers for this marketing year.

Soybean crush

The increase in soybean crush volumes to help meet the demand for soybean oil continues to be a market mover worth watching.

Iowa is welcoming the opening of the Platinum Crush LLC facility near Alta in northwest Iowa.

“This is exciting and reflects our ongoing trend of crush expansion,” says Marshall. “Any time you can have a localized point of delivery, that is going to be beneficial to farmers not only with an improvement on the basis but also with the addition of having increased security of demand for their crop.”

As more crush plants come online, what about the demand for soybean meal, which is co-produced with soybean oil during the crushing process?

Soybean meal exports reached a record 13 million tons last year. However, this success was partly due to the losses in the Argentine crop after a lengthy drought. Although the Argentine crop has since rebounded, the U.S. soybean exports are still outpacing last year’s record pace by double digits.

“This highlights the increasing importance of meal for the U.S. soy industry as they continue to focus on export channels in the future,” he says. “Demand could abate in the months to come as there is more product coming out of South America. Still, showing double-digit annualized growth, on top of an already record year last season, is exciting.”

South America

A marketing headwind affecting soybean prices is a rebound in South American production.

The question remains: Just how big is the South American crop? The United States Department of Agriculture (USDA) estimates a Brazilian crop of 155 million metric tons, roughly 8.5 million tons larger than estimates by the Brazilian government.

“Crop production isn’t as low as what is being reported from the Brazilian government,” Marshall says. “We are looking at full reconciliation of that crop and the potential impact it will have in the marketplace, which is certainly impacting the farmers’ pricing.”

GREET Model

The Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model, which determines crop-based feedstocks’ viability, including soybean oil used to produce sustainable aviation fuel (SAF), could also affect the markets.

As announced on April 30, soybean oil-based SAF would qualify for the minimum tax credit of $1.25 per gallon under a safe harbor provision.

 The latest announcement clarifies for farmers and the industry the actions they can take to further reduce their carbon footprint beyond the baseline of 50%.

“I view the guidance as a small, positive step forward for soybeans,” says Matt Herman, chief officer of demand and advocacy for the Iowa Soybean Association.

Soy is the only domestic crop-based SAF that qualifies for tax credit without adoption of additional conservation practices by farmers or major carbon-cutting upgrades at the biorefinery, like a carbon pipeline.

“This speaks to the highly sustainable nature of the crop, the hard work and conservation efforts of American soybean farmers and the highly efficient processing route to convert lipids to fuel,” says Herman.

Marshall notes that although SAF has great potential, it’s essential to recognize the current market of renewable diesel, which, combined with the legacy biodiesel market, uses nearly 12 billion pounds of soybean oil.

“Soybean oil remains an important feedstock for renewable diesel production,” says Marshall. “Currently, its share in renewable diesel production is low due to increased imports of used cooking oil. However, the volume of soy used for this purpose is still significant.”

A volatile market

According to this week’s Iowa Crop Progress and Conditions report released by the USDA National Agricultural Statistics Service, 25% of the state’s soybean crop has been planted, five days ahead of average.

We are now entering a weather market. Unless a major event disrupts the speedy planting pace, it is advisable to monitor the markets in June, when the crops are still in the early stages of development, and in July, when corn and soybeans are at the peak of their physiological development.

“Look for volatility in the market,” says Marshall. “Remember, current U.S. inventories of soybeans are higher than they have been in the last couple of years. However, we are still not in a burdensome oversupplied position, so the weather has additional influences on the market.”

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