MarketsFarm — There has been a rally at the Chicago Board of Trade (CBOT) following the release of the monthly supply and demand report from the U.S. Department of Agriculture (USDA — but it’s unlikely for that rally to continue, an analyst said.
Soybeans jumped in excess of 25 cents per bushel in the nearby January and March contracts (all figures US$). Soymeal in the same months gained more than US$9 per short ton and soyoil increased by over 50 cents/lb.
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Prices for corn were up by four cents per bushel, while the wheat complex rose by between eight and 16 cents a bushel.
“I really don’t see anything materially that’s really bullish to sustain a rally here” — especially when it comes to soybeans, Terry Reilly of Futures International in Chicago said.
The average trade guess had placed 2021-22 soybean production at 4.48 billion bushels.
“They came in 59 million bushels below trade expectations. That got the beans going, shooting out of the gate after the report was released,” he said.
In fact, Reilly pointed to prices trending lower as good harvest weather in the U.S., coupled with good planting weather in South America, will put pressure on soybean and corn values in Chicago.
It would not be surprising over the short term, he said, to see soybeans fall to $11.50 per bushel if the weather holds on both continents.
One of the plus factors for corn was an expected bump in use by the ethanol sector during 2021-22 to 5.25 billion bushels, up from the 5.2 billion bushels projected in October.
The analyst said corn is likely to go sideways in the short term as well, and could retreat to $5.35/bu. if soybeans pull back. Also, such a decline could force Chicago wheat down to $7.65/bu.
Reilly stressed the need to exports to improve, especially for soybeans. The commodity saw a 6.4 per cent drop in exports at 2.05 billion bushels.
“We need to see a significant recovery in export demand. Exports for beans have been very good lately, but we need to keep that going to come close to the USDA’s projection”, he said.
Table: Highlights from USDA’s November 2021 WASDE report, in millions of bushels except where noted.
| Corn. . | Soybeans. . | Wheat | |
| Yields (bu./ac.) | 177.0 | 51.2 | 44.3 |
| October 2021 | 176.5 | 51.5 | 44.3 |
| Difference (per cent). . | +0.3 | -0.6 | 0.0 |
| Production | 15,062 | 4,425 | 1,646 |
| October 2021 | 15,019 | 4,448 | 1,646 |
| Difference (per cent) | +0.3 | -0.5 | 0.0 |
| Exports | 2,500 | 2,050 | 860 |
| October 2021 | 2,500 | 2,190 | 875 |
| Difference (per cent) | 0.0 | -6.4 | -1.7 |
| Ending stocks | 1,493 | 340 | 583 |
| October 2021 | 1,500 | 320 | 580 |
| Difference (per cent) | -0.5 | +6.3 | +0.5 |
