March Soybeans Winter High and Low – 11/03/2023
In the October 2023 WASDE report USDA forecast the new crop US soybean carryout at 220 million bushels or 5.3% of crop year usage which is close to a minimum pipeline supply. The accompanying scatter studies display the winter high and low for March soybeans as a function of the USDA’s new crop carryout to usage forecast. The data in the factors extended back to 1973/74, the first year monthly USDA S/D estimates were available.
Note that recent years data read high on the scatters reflecting inflationary pressure. Also, soybean oil values have been inflated by use in biodiesel. March soybeans will likely make a winter high between $14 and $15 assuming normal South American weather and a low between $11 and $12 based on the same assumption.
Our soybean market forecasts are highly dependent on the crop year in South America as the Brazil-Argentina-Paraguay soybean crop is significantly larger than US soybean production. The critical time for South American soybean production is November through February. The Southern Oscillation index suggests a strong El Nino phase this fall (Austral spring) which is strongly associated with adequate rains in the South American soybean belt. In the past the El Nino phase of the SOI Brazil in particular has always enjoyed a big soybean crop.
A surprise break in the long time link between El Nino and Brazilian soybean crop size
could add at least $2 to our price forecasts.
The Point marked USDA is based on October USDA S/D forecasts and March soybean last quote on 11/3/2023.