The push and pull of bulls and bears

July 18, 2024 | Jeff Hutton

It’s a toss-up between the “bulls and bears” as evidenced by July’s World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture (USDA).

Soybean production is projected at 4.4 billion bushels, down 15 million bushels on a lower harvested area according to the report. Harvested area, forecast at 85.3 million acres in the June Acreage report, is down 300,000 bushels. The soybean yield forecast remains unchanged at 52 bushels per acre. With slightly lower beginning stocks, reduced production and unchanged use, ending stocks for 2024/2025 are projected at 435 million bushels, down 20 million from last month.

The U.S. season-average soybean price for 2024/25 is forecast at $11.10 per bushel, down 10 cents from last month. Soybean meal and oil prices are unchanged, at $330 per short ton and 42 cents per pound, respectively.

A ‘ray of hope?’

Kristin Stien, a grain marketing advisor from Benton County with Ever.Ag, says the July report lacks any punches.

“Many believe the USDA punted once again in this report, which isn't a huge surprise,” she says. “The fireworks tend to come in the August report. I did think that they were going to make bigger adjustments to South America's production than what the results showed.”

The WASDE showed Brazil's production numbers staying the same for corn and soybeans. Argentina's corn crop was lowered by 1 million metric tons. The soybean crop being was lowered by 500,000 metric tons.

Global soybean beginning stocks for 2024/25 are increased slightly, with higher stocks for China mainly offset by lower stocks for Argentina, Brazil and Paraguay due to revisions for 2023/24. Argentina’s soybean production for 2023/24 is revised down 500,000 tons to 49.5 million guided by data from Argentina’s Ministry of Agriculture, Livestock and Fisheries.

China’s soybean imports for 2023/24 are revised up 3 million tons to 108 million on larger-than-anticipated arrivals expected in the fourth quarter of the marketing year. Exports for Argentina, Brazil, Paraguay, Benin and Canada are also raised for 2023/24. With slightly higher beginning stocks, lower global production, and minor changes to use in 2024/25, global soybean stocks are reduced 100,000 tons to 127.8 million on lower stocks for Argentina, Brazil, Paraguay, Russia, the European Union and the United States, mostly offset by higher stocks for China.

In terms of the U.S. numbers, Stien says stocks were slightly lowered on old crop corn and beans, which helped to offset large production numbers for new crop.

“The push and pull between bulls and bears is going to continue to focus on the growing crop,” she says. “As we head into the month of August, a critical growing period for soybeans, all eyes will be on the weather. Do we give the funds a reason to exit their near-record short position? Or will good crop conditions continue and keep the bear hibernating?”

Aside from the weather and the funds, Stien says the focus will be on the dollar and the geopolitical environment.

“The United States is well behind in their new crop export pace and is roughly $15 per ton more expensive than Brazil and Argentina,” she says.

Is there any good news?

Stien says if Mississippi River levels start to go down, as well as lower soybean prices, farmers may see a “ray of hope” on the horizon for the funds to lift out of their short positions and provide a bit of support to the markets.

“Since August futures are reaching a pivotal technical support level, $10.80 per bushel, let's pray that the ray of hope arrives sooner than later,” she says.

More data needed

Iowa Soybean Association District 7 Director Scot Bailey of Anita says the report was not too alarming.

“I will say I was surprised with the reduction with the ending stocks; that was interesting,” he says.

However, he wonders if the latest WASDE report took into consideration drought worries in the eastern part of country, as well as a big swath of hail and the intense flooding woes that have impacted Nebraska, northwestern and northern Iowa.

“I’m thinking we’re going to reduce acres more,” he says. “There are just too many different variables to consider.

“These wild weather swings and changes over time – it seems like these guys, the economists and others, are discrediting some of it.”

Bailey says while he follows the WASDE report every month, he wonders if the information is truly comprehensive.

“Are we getting enough information from the farmers for the WASDE report to be meaningful,” he asks. “Are we getting everybody who fills out the survey? Are farmers reluctant to share their information? I can see where maybe the information might be dwindling.”

He concedes the WASDE report is just one piece of the puzzle when it comes to getting a true picture of what’s going on both domestically and globally.

“The thing is, there is some good information there and I’m glad it gets put out every month,” Bailey says. “But it’s just one tool in your toolbox. I also get two different marketing reports every day just to keep up with the marketing side.”

And when it comes to marketing, Bailey says he has a good relationship with the two elevators he is currently selling to, so keeping a good tally of what’s going on helps with those decisions.

“WASDE is just one guideline,” he says. “It’s important that the report keeps coming out, but we need more accurate numbers. It’s only as good as the data we put into it, and we need to get better data.”

Crop report and weather

In the latest crop report from the Iowa Department of Agriculture and Land Stewardship (IDALS), most of the state received below normal rainfall and experienced mild temperatures this past week. These conditions allowed Iowa farmers 5.1 days suitable for fieldwork, according to the USDA’s National Agricultural Statistics Service (NASS).

Topsoil moisture condition rated 0% very short, 6% short, 84% adequate and 10% surplus. Subsoil moisture condition rated 1% very short, 8% short, 82% adequate and 9% surplus.

Soybean crop blooming reached 50%, three days behind last year. Soybean setting pods reached 12%, one day behind last year but equal to the five-year average. Soybean conditions were rated 72% as good to excellent.

Beginning next week and throughout the remainder of July, temperatures will climb back into the low- to high-80s with mostly sunny conditions. A few scattered and isolated thunderstorms are possible during this timeframe as well.

Thursday’s report from the U.S. Drought Monitor shows Iowa remains drought free, as well as neighboring states Minnesota and Wisconsin, Both Missouri and Illinois have small pockets of farmland listed as abnormally dry, while South Dakota and Nebraska reports minor drought conditions within the western portions of those states.

 

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