Cash Soybean Spring Trading Range? – 3/12/2022

The accompanying scatter studies displays the spring trading range for cash soybeans as a function of the US soybean carryout/crop year usage ratio as forecast by USDA in June. Currently  cash soybeans are trading at an elevated level compared to the historic stocks/price function as expressed in the regression line. Periodically, the stocks/usage – price function shifts upward due to inflationary pressures, but has been relatively stable since the early 2000s. 

Soybean market bulls can point to soybean oil values having more than doubled over the last two years because of the use of soybean oil as bio fuel. Also to be considered are the very wide soybean crush margin which is currently double the normal profit margin. And the South American soybean crop forecast may get even smaller than the 15% reduction (from the preseason trend projection) already incorporated in USDA’s March estimate.

Still, there may be a tendency  for soybean values to drift back down to the regression line assuming the South American soybean crop doesn’t get significantly smaller than the USDA’s March forecast.

Note we have USDA’s March S?D forecast in placing the point for 2022. Stronger soybean demand than USDA assumes would push the 2022 point to the left and
result in a higher price forecast.