New Crop Soybean Futures Trading Range – 05/13/2022

November soybeans would have more downside than upside potential based on the USDA’s new crop supply/usage balance published on May 12. The accompanying scatter studies display the summer-fall high and low for the November soybean contract as a function of the ratio of new crop stocks to crop year usage. The independent variable assumes the ratio as forecast by USDA prior to expiration of the November contract. 

Of course the USDA’s May production forecast  assumes normal summer weather in the Midwest in 2022. The ratio barometer would move sharply to the left if summer drought occurs during the mid June through mid August period. For example, a repeat of the poor weather which occurred in 2012 would result in the loss of roughly 700 million bushels of soybeans and November 2022  soybeans possibly trading in the upper twenties.     

Low Scatter study.

Note we do not include residual usage in our calculations.