Soybean Market Review: Domestic Markets Down, South American Harvest Almost Complete

The domestic edible oils, as well as oilseeds markets, have been under pressure since the beginning of June 2022. Negative cues from the major overseas edible oil markets, coupled with a depreciating rupee and pressure on crude oil were the bearish price drivers. Harvesting of South American crops had added to the weak undertone.

Malaysian palm oil futures posted a second consecutive weekly loss of about 8% as of June 17, weighed by rising Indonesian exports and an expectation of improving output. Chicago-traded soybean futures are at their highest ever levels for mid-June despite the forecast for a record-large U.S. harvest this fall and a supply recovery into next year. The harvesting of soybean is nearly over in South America i.e., in Brazil, Argentina, and Paraguay.

The USDA has raised the production 2021/22 Argentine Soybean from last year’s 2.63 bushels per hectare to 2.71 bushels per hectare. The processors are expected to increase their crush volume in the 2021/22 marketing year by 250,000 metric tons to 40.25 million. Meanwhile, the harvested soybean acreage in Brazil is slightly higher than anticipated. The USDA has raised Brazil’s 2021/22 soybean production estimate by 1 million to 126 million metric tons, after increasing the estimate for the harvested area by 200,000 hectares this month to 41 million.

Brazil is expected to export the majority of the soybean meal produced from increased crush volumes. The latest USDA report stated that 650,000 metric tons of the additional 775,000 in soybean meal production will be exported, and the remainder will be stocked. Of the 192,000 metric ton increase in soybean oil production, Brazil is projected to export 75,000 metric tons this marketing season.