What You Need To Know About Soybeans

Where are we? Trade update

So, you know those expectations they had about normal weather? Well, Mother Nature decided to throw a curveball at us! Forget the ordinary, because we're in for a wild ride.

Down in South Brazil, where rain usually behaves itself during the growing season, we've had a bit of a rain party. And guess what? It's not crashing the soybean yield bash; it's making it trend even higher! 🌧️🌱

But wait, head up north, and it's a different story. The first half of the growing season threw us the hottest and driest fiesta ever. Yields got a little sunburned, but fear not – we can still sprinkle some magic and change the game. The year 2015/2016 had a similar setup, and it suggests we might see a 15% dip in soybean yields up there. Hold onto your hats!

Now, buckle up for some numbers! In 2015/2016, total Brazil soybean yields did a little dance, down by ~2 bushels per acre. Fast forward to now, and we're thinking we might see a repeat, but with a twist – delayed planting, replanting chaos, and alternative crops joining the party.

We're predicting a plot twist: the 112 million acres might shrink to 110 million acres. Crunch the numbers, subtract 2 bushels per acre, and voila! We're looking at a soybean production of 5.61 billion bushels, down from the original 5.953 billion. That's a reduction of ~340 million bushels! 📉

Now, picture this: Brazil's soybean exports doing a little tango, declining by 340 million bushels. But don't worry, the USA is here to jump in and pick up the slack with a 340 million bushels increase!

The current USDA carry-out for the summer of 2024 is 245 million bushels. We're on a rollercoaster ride, and we think it's a reasonable base case – but who knows, the weather might throw in a plot twist come Jan/Feb 2024!

And here it is: If our soybean saga starts spreading, brace yourselves! The soybean market might just rise to ration demand. Rain or shine, the market loves a good story.

Oh, and a little side note for all you Argentina fans – they may boost their soybean production, but since they sell bean-meal and bean-oil, it won't steal Brazil's thunder in raw soybean exports to the US.

So, in the grand finale of our South American soybean production show, we're looking at a net increase of 360 million bushels compared to last year.

At the moment we are keeping our long Soybean position…

All Futures positions… QTD