USDA's October Report Boosts US Soybean Prices

Monday, October 16, 2023

The USDA's most recent reports had a noticeable impact on soybean futures in October, with a rally in prices. The 2023 soybean production estimates saw a slight reduction, while ending stocks remained unchanged.

Karl Setzer, an expert with Consus Ag Consulting, commented on the market's response, stating, "In the soy complex, the data that we received wasn't necessarily bullish—it simply wasn't bearish, and that's what trade was expecting."

Of particular note, soybean ending stocks held steady at 220 million bushels, defying the trade's expectations of an increase to 236 million bushels.

Setzer highlighted the role of funds in the market, explaining, "Funds have been heavily liquidating soybeans. They actually got out of their longs and were just edging into short territory. Then they got what I would call a 'neutral surprise' in the market. That got everything to turn higher and brought in some buyers."

Additionally, the global perspective played a significant role, as Setzer pointed out, "Then, we look over at the global side, and the global soybean ending stocks came in 4 million metric tons less than trade was expecting and brought even more buyers to the market."

The USDA's report indicated that soybean production is forecasted at 4.1 billion bushels, with a decrease of 42 million due to lower yields. The yield is estimated at 49.6 bushels per acre, down by 0.5 bushels from the previous month.

At the close of trading on October 12, November soybeans finished at $12.90 a bushel, up by $0.37 ½.

Karl Setzer observed that while corn and wheat also received positive reports, they did not experience the same level of enthusiastic buying seen in the soybean complex.

Corn ending stocks are estimated at 2.11 billion bushels, and U.S. corn production is forecasted at 15.1 billion bushels, with a 70 million reduction due to a cut in yield to 173.8 bushels per acre. The corn outlook anticipates reduced supplies, which are less than one percent lower but still ten percent higher than in 2022.

Wheat supplies were raised by 85 million bushels, primarily due to higher production reported in the NASS Small Grains Summary. Wheat ending stocks increased by 55 million bushels from the previous month, reaching 670 million bushels, exceeding previous trade estimates by 23 million bushels.

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