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Soybean Market Explodes on USDA Report


The USDA May crop report provided the much needed information to take the soybean market to a level not seen since November 2014.  November soybean futures closed at $10.67, a gain of over .51. In the report released on Tuesday, U.S. Soybean ending stocks for the 2016/17 crop year were reduced to 305 million bushels and 100 million below the average trade guess.  The “old crop” carryout was reduced to 400 million bushels down from 445, by raising exports by 35 million bushels and another 10 million bushels to crush.  “Again, the corn/soybean price ratio has grown to 2.75 and would encourage more bean acres down the road,” said Waterstreet Solutions in a post report analysis. “If the regional areas continue to experience delays of getting into the fields then the decision to possibly change some acres around becomes even easier.  The South American reduction in crop expectations also helped add to the rally as well today.  Brazilian soybean production was cut 1 mmt to 99 mmt, and Argentine soybean production was cut 2.5 mmts to 56.5 mmts and very close to most estimates.“


Corn finds a lot more demand according to the USDA May crop report with an increase by 525 million bushels overall.  300 million increase in Feed and residual usage, 50 million bushels in ethanol, and another increase of 175 million in export expectations.  “Looking at both sides of the coin, expecting a decline of corn acres because the current corn/soybean ratio is now at 2.75 and should put more pressure to raise a big overall yield.  Corn would still be at a cheap price should a summer issue show up, and much bigger rallies should be expected if a summer problem shows up,” said Waterstreet. “On the other side, should the USDA forecast come true the US would still have a carryout over 2.1 billion bushels.  In the end, the US will not be running out of corn anytime soon but the report did make things less comfortable in the carryout and weather scares or actual issues will bring a bigger premium than before.”


More on the report with F. C. Stone’s Arlan Suderman