Since August, there’s been no shortage of bullish news for soybeans. In roughly three months, the market has rallied about $3 and it doesn’t appear to be slowing down anytime soon.
Mac Marshall, vice president of market intelligence for the United Soybean Board, said the catalyst has been tighter projected ending stocks.
“Last year we were over 900 million bushels and ending inventories, and now we’re looking at projected carryout at the end of the 2021 marketing year under 200 million bushels,” he said.
Demand has also been robust the last several months as well.
“Granted, demand for soy grows year after year—the particular growth we’re seeing this year on a global level is significant,” said Marshall. “Globally, total demand is 370 million metric tons, up 15 [million metric tons] relative to last year, and that’s outpacing typical annual growth pretty significantly. Annual growth is around 11 million metric tons the past 10 years.”
In October, USDA took export forecasts up 2.2 billion bushels, or just under 60 million tons. Marshall said that’s a record with 85 percent of projected soybean exports have been sold so far this marketing year. It’s also the first marketing year to fully take advantage of the Phase One agreement with China.
“Being at the tail end of our peak export window and seeing those tremendous volumes go to China has certainly been supportive,” said Marshall. “Every time there’s been a flash sale or news of China purchasing, it’s always supportive for price and provides these intraday rallies.”
China has been frontloading some of their purchases, but Marshall says what’s going to sustain U.S. soybeans will be exports to other markets.
“Southeast Asia, Indonesia, Vietnam and Egypt has been a strong source of growth over the last couple years as well,” he said.