Market Analysis

Heat and dryness reducing S America’s crop prospects & Russia’s invasion of Ukraine has increased US/World soybean prices by over $3 a bushel since 2022 has begun. The US processing industry has been running at a record pace during the first 6 months of the crop year, but low pork prices & poor crushing margins have curtailed China’s protein demand reducing US exports from last year’s record 1st half US pace. The trade will note the USDA’s quarterly soybean stocks level on March 31. However, the US planting intentions out the same day will probably be the market’s main focus. This year’s high US corn input costs & lost sunflower output from the current Black Sea conflict cutting Ukraine’s 2022 plantings are prompting higher US seeding ideas. Since 2012, the US first half (Sept-Feb) processing level has been higher than the previous crop year. This looks to be the case again with February’s US National Processor (NOPA) report revealing a 165.1 million bu. level, up 9.9 million bu. from 2021. This past winter quarter’s total crush will be near 568 million bu, a 13.84 million rise from last year. Overall, 2021/22’s processing pace appears to be 7 million bu. higher than 2020/21 for another first-half US domestic record. Overseas US soybean demand continues to be impacted by the US/China trade situation. After record US export demand last year when China experienced some internal crop issues & was rebounding its domestic hog herd after ASF, China has remained a hand-to-mouth US buyer despite S America’s output being reduced this year. This past DecFeb quarter’s US shipments appear to be 21% lower than last year at 690 million bu. Given this year’s 10-14 mmt reduced S Am production, the current 2.09 billion bu US export forecast seems attainable. Despite this year's strong US crush demand, beans US March 1 stocks will likely be 1.92 billion bu., up 358 million from 2021 because of this year’s larger crop. Last fall’s 137 million bu. residual suggests this year’s winter disappearance will be 27 million bu. This level is a combination of export supplies in transit & soybeans moving to seed firms.

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What’s Ahead:

The USDA’s March 1 soybean stocks will be the first check if 2021’s crop size is on target. This quarter’s residual and June’s quarterly stocks will determine if a crop size change is needed. 2022’s planting intentions will get plenty of attention on March 31, but the perceived size of 2021’s crop & soybeans’ demand rate remain important. Hold old-crop sales at 90% & have 25% of your 2022 output priced.