Soybean markets and the weather, what's going on?

May 23, 2024 | Jeff Hutton

It was Benjamin Franklin who coined the phrase “in this world, nothing is certain except death and taxes.”

In other words, as in most things in life, uncertainty will always prevail and there are few guarantees. And if you ask any Iowa soybean farmer, that’s certainly the case when it comes to markets and the weather.

Kristin Stien, a grain marketing advisor from Eastern Iowa for Ever.Ag, says soybeans in recent days have enjoyed a “nice rally since the beginning of the month with a few roller coaster dips in between.”

She notes that with the Rio Grande do Sul in Brazil experiencing massive flooding issues (which have damaged 3 million metric tons and bottlenecked cargo movement) along with May being a wet month for U.S. planting, the funds decided to lighten their short positions by 100,000 contracts, leaving them short more than 42,000 contracts.

WASDE report

“The ‘positive’ market news is something that producers need to keep a close eye on and be sure they are keeping in mind the big picture,” Stien says. “As we near the 200-day moving average, soybeans are starting to find a lot of demand issues. Crush margins have dropped dramatically in the months of April and May. This, as well as slow grain movement during the planting season has drastically slowed the soybean crush pace. Exports are at a 19-year low due to South America pulling in a record crop this year and are being more competitive in the global marketplace.”

In the most recent World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture (USDA), the 2024/25 outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks compared with 2023/24. The soybean crop is projected at 4.45 billion bushels – that’s up 285 million on higher area and trend yield. With higher beginning stocks and production, soybean supplies are forecast at 4.8 billion bushels, up 8% from 2023/24. If those numbers are realized, that would be second only to 2018/19, putting pressure on soybean prices for the marketing year. Back in late March, the USDA projected U.S. farmers will plant 86.5 million acres of soybeans and harvest 85.6 million acres with trend-line yields of 52 bushels per acre. Again, if those numbers hold true, that would be about 1.4 bushels per acre higher than in 2023/24.

The USDA says U.S. soybean crush for 2024/25 is projected at 2.43 billion bushels, up 125 million from the 2023/24 forecast on higher demand for soybean oil as a biofuel feedstock, projected to increase 1 billion pounds to 14 billion. Domestic soybean meal disappearance is forecast to increase 3% from 2023/24 on increased pork and poultry production.

U.S. soybean meal exports are forecast at 17.3 million short tons, indicating a 21% share of global trade, compared to the prior five-year average of 19%. U.S. soybean exports are forecast at 1.83 billion bushels, up 125 million from 2023/24 with higher exports this fall due to a lower Brazilian 2024 harvest. With strong seasonal exports after harvest followed by pressure from larger South American production in 2025, the U.S. share of global exports is forecast at 28%, down from the prior five-year average of 32%.

U.S. ending stocks for 2024/25 are projected at 445 million bushels, up 105 million from last year. If those numbers hold true, it would be the highest level since 2019/20 and 20% above the 10-year average. This would put the stocks-to-use ratio at 10.2%, the highest since 2019/20 and only the seventh time since 2000 that it would exceed 10%.

“Due to all this, massive global stocks and a 400+ million bushel domestic ending stocks, I am heavily encouraging producers to be aggressive participants with any and all rallies that occur during this growing season,” says Stien.

The 2024/25 U.S. season-average soybean price is forecast at $11.20 per bushel compared with $12.55 per bushel in 2023/24.

As of noon Thursday, the price of soybeans was clocked in at $12.39 per bushel.

The soybean meal price is forecast at $330 per short ton, down $50. The soybean oil price is forecast at 42 cents per pound, down 6 cents from 2023/24.

Meanwhile, the 2024/25 global oilseed outlook shows higher production, crush, exports and ending stocks compared with 2023/24. Global production is rising 28.9 million tons to 687.1 million mainly on higher soybean production for the United States, South America and South Africa. Brazil’s soybean production is forecast at 169 million tons, up from the revised 2023/24 crop of 154 million, which was reduced due to flooding in Rio Grande do Sul, as Stien noted. Argentina’s soybean output is forecast at 51 million tons for 2024/25.

Global 2024/25 oilseed crush is growing 17.3 million tons to 560.8 million from 2023/24, with most of the growth for soybeans (15.9 million) mainly for Argentina, China, Pakistan and the United States.

Global soybean exports for 2024/25 are increasing 4% from last marketing year mainly on higher soybean exports for the United States, Brazil, Argentina and Ukraine. Soybean imports are higher for China, Pakistan, Egypt, Mexico, Iran and Vietnam. China’s soybean imports are rising 4 million tons to 109 million on larger global supplies and lower prices. Global 2024/25 soybean ending stocks are projected up 16.7 million tons to 128.5 million, with most of the increase for Brazil, Argentina, the United States and China.

Weather watch

And like the markets, weather continues to be the great unknown.

According to the May 23 U.S. Drought Monitor, nearly two-thirds (66.42%) of Iowa is listed as having no drought issues, while 12.67% is considered abnormally dry and 20.91% as moderately dry. Those counties in Iowa listed as having any degree of drought are primarily in northeast Iowa.

Those numbers, however, do not reflect the most recent rainfall the state received this past week, which included devastating storm damage and flooding.

The forecast for much of the state indicates more rain this weekend with mostly dry conditions between now and the beginning of June. High temperatures are expected to fluctuate in the mid-70s to low 80s; lows primarily in the 50s.

According to the most recent crop report from the Iowa Department of Agriculture and Land Stewardship (IDALS) the USDA’s National Agricultural Statistics Service (NASS), scattered showers across the state the previous week allowed farmers 3.8 suitable days for. Some replanting had already occurred due to drowned out areas in fields.

IDALS reported that topsoil moisture condition rated 1% very short, 6% short, 77% adequate and 16% surplus. Subsoil moisture condition rated 4% very short, 14% short, 73% adequate and 9% surplus.

Sixty-one percent of Iowa’s expected soybean crop has been planted, a week behind last year and two days behind the norm. Nearly one-quarter of the soybean crop has emerged, three days behind last year but equal to the average.

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