Soybean Winter Price forecast – October 16 2023

The USDA tightened the US soybean usage balance estimate modestly this month by reducing the soybean production estimate based on the October survey.We have reproduced the USDA’s October WASDE report and included scatter studies with the winter high and low for deliverable soybeans as a function of the US soybean carryout as a % of crop year usage. The point marked in red assumes the USDA October S/D and the close  for March soybeans on 10/16/2023.

The Dominant force in the soybean market into the new calendar year will likely be development of the 2024 Southern Hemisphere soybean crop. USDA expects a sharp increase in the Brazilian soybean crop based on increased area planted and the current stage of the El Nino cycle which strongly favors an above average yield. USDA’s Southern Hemisphere  expectations are reflected in a projected sharp drop in US soybean exports during the 20232024 crop year.

Assuming the USDA’s October S/D forecast would suggest a $11 to $14 trading range  basis the March soybean contract. Major crop problems in Brazil would be shocking to the market and result in $16 plus soybeans, but that is a longshot based on the historical El Nino data.  There is a better chance for soybean crop problems in Argentina where the historical El Nino-soybean yield correlation is not nearly as tight.