USDA Soybean Data Seen Slightly Bearish – Will the Upside Momentum Ease Now

The USDA demand and supply monthly report was released on Friday and seems slightly bearish for the soy complex market. But the overall scenario still remains favorable for further prices appreciation in global soy complex i.e. soybean/soya oil and soy meal. For soybeans, the U.S. ending stocks were estimated at 120 million bushels, unchanged versus the March estimate. 

Trade expectations were near 119 million bushels. The world ending stocks were estimated at 86.9 mmt, as against the market guess of 83.52 mmt. The number was slightly above the December estimate of 83.74 mmt. Global oilseed stocks are estimated higher by almost 4 million tons, mainly due to hike in Brazil and China carryout estimate. Reduction in Argentina soybean stock estimate could not offset the increase in Brazilian and Chinese stock numbers. Brazilian production was revised higher by 2 million metric tonnes to 136 million metric tonnes, which was not expected by most participants. 

The late rains in Brazil are now seen favorable for increase in the output.  Global soybean exports were increased by 30.0 million, but crush was lowered 10 million. On the other hand the world soybean ending stocks were increased by 2.0 million. Global 2020/21 oilseed production is forecast at 598 million tons, more than 2 million above the March estimate.  World Soy oil and Soybean prices continued their nearly 12-month upward journey during the March month, and major influence was the anticipated improvement in a post-COVID economy. Soybean oil prices spiked in the month of March were also driven tightening vegetable oil supplies and expectations of higher demand for soybean oil for biofuel use.  

Year 2021 saw US/Indian soy oil prices climbing to 1o multi year highs. The USDA overall did not offer any surprise for the market. Prices are already running higher therefore considering the April report to be neutral we expect some profit taking in the domestic markets in coming days. But the holistic picture continues indicating that the broader supply and demand fundamental situation has not changed in the soy complex basket. 

Market talks indicate that consistent growth in world soybean usage, are most likely to keep ending 2020/21 supplies at the tightest level in twelve years. This would imply that average soybean prices in India and other leading world markets shall maintain higher levels much above last year’s, in coming months. 

Summing up we may minor fall in the forthcoming week but the average price levels may remain firm during remaining days of April month. In near future in case US soybean prices remain in the upward track for few more weeks, the larger Brazilian bean crop can force the US sellers to offer some price discounts to their overseas consumers. In other words, Brazil’s new crop supplies will result in competition amongst US exporters in near future, in case prices continue maintaining expensive levels for next few weeks.