by: Todd Hubbs Department of Agricultural and Consumer Economics University of Illinois
Soybean prices moved lower last week despite the positive outlook in the USDA’s May WASDE report. The report, released on May 9, projected that stocks of U.S. soybeans at the end of the current marketing year would total 530 million bushels, slightly less than generally expected. The recent choppy price pattern reflects uncertainty in trade negotiations, the large Brazilian soybean crop, and weakening South American currencies.
November soybean futures prices moved in a band between $10.20 and $10.50 after the release of the surprisingly low March Prospective Planting report placed soybean acreage at 89 million acres. Prices broke lower on May 7 and continued to show weakness through May 18. The July – November price spread moved into negative territory on May 7 and reflects near-term uncertainty regarding trade prospects and planting issues. An additional level of uncertainty is the recent strengthening of the U.S. dollar to the Brazilian real which saw Brazilian export prices move on par with U.S. Gulf export prices. Brazilian production estimates of 4.3 billion bushels are equal to last year’s record crop with some reports indicating the potential for even higher levels. The rapid drop in the Brazilian real last week brought increased sales by Brazilian farmers. Weekly exports of U.S. soybeans face increased competition from Brazil.