1/11/2024

Soybean price: analytics and forecasts

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Key points:

  • In recent years, soybean futures have typically risen on the day these data are released due to analyst bias in expectations for the data.
  • However, soybean prices fell 4.7% in 2024, the worst start to the year in 40 years.
  • The USDA’s January 2024 report expects Brazil’s soybean production to decline 3% from last year.

The release of USDA data on Friday often sets the tone for grain and oilseed markets in the first half of the year. However, the sheer volume of data can make it challenging to determine the precise factors influencing price movements.

Despite the complexities, one consistent trend has emerged for Chicago-traded soybeans: futures prices have risen on January report day for eight consecutive years. The pattern for corn futures is more nuanced. Although there have been instances of sell-offs after the release of USDA data, it’s been more than a decade since the report consistently triggered downward price movements.

Mixed growth

The recent trend of soybean futures rising on January report day can partly be attributed to analyst expectations biases. This is because U.S. inventory and production data in recent years haven’t been unexpectedly bearish. However, over the past decade, U.S. soybean production in January has only exceeded trade forecasts three times.

Despite this, soybean futures could potentially react to bearish data this year in light of the substantial losses already experienced. In 2024, the most active soybean contract has fallen 4.7%, marking the worst start to the year in four decades.

While U.S. corn and soybean production and quarterly U.S. inventories typically take center stage in January USDA reports, South America will be a key focus in 2024. Winter wheat planting in the U.S. and regular updates on global supply and demand for grains and oilseeds will also be closely monitored.

Traders will be closely watching Brazilian soybean valuations due to the recent heat and drought in the country, with analysts forecasting a 3% decline in production from last month. As expected, the USDA reduced Brazil’s February 2019 harvest by 4% compared to two months earlier.

Corn prices show greater stability

CBOT corn futures have exhibited a remarkable degree of stability in January, ending the reporting day lower only three times over the past decade. In all these instances, the declines were relatively modest. The last time corn futures experienced a significant downturn on January report day was in 2011, with a 6% drop.

The most active corn contract in 2024 is down 2.5% from the previous year, a larger decline than in most years but smaller than the decline from a year ago. This resilience is consistent with corn’s recent performance in January, as U.S. inventories and production data have not been surprisingly bearish.

U.S. corn production has exceeded trade expectations in three of the past 10 years, with 2019 being the only record year. Similarly, December 1 corn inventories have exceeded trade estimates in four of the past 10 years, albeit by margins within 1%. This suggests that corn markets have not been overly sensitive to negative production or inventory data in January.

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