MarketsFarm — Soybeans were the high-rising crop on the Chicago Board of Trade (CBOT) for the week ended Wednesday, two days before the U.S. Department of Agriculture’s monthly world agriculture supply/demand estimates (WASDE) are released.
Old- and new-crop soybeans all rose in tandem during the week, but while old-crop contracts are rising in price due to scarcity, the new-crop contracts may soon go into a downturn.
“Beans seem to be the story, but if I were a producer looking at new-crop pricing here, giving all that they’re going to plant… that could swell ending stocks (in the U.S.) to 300 or 350 million bushels,” said Sean Lusk, co-director of Walsh Commercial Hedging Services in Chicago.
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“At these levels, South America is going to grow all they can. That has the ability to pressure things too.”
Soybeans have the unique opportunity to fully recover from tight supplies with good harvests in both North and South America this year, Lusk added.
“Beans have the ability to provide comfort, meaning if they grow a decent crop, you’ll have an acceptable supply, a cushion,” he said.
Wheat contracts have traded rangebound during the week after major selling action over the previous few weeks due to speculation over the establishment of a Ukrainian grain corridor in the Black Sea. However, Lusk does not believe Ukrainian grain will be transported anytime soon.
“They’re just rumours. There’s been a lot of hearsay and guesses. It’s all b.s. at the end of the day,” he said. “Weather is 90 per cent of our pricing influence, but when have you ever had a year where all these external factors (such as the war and the pandemic) are affecting the prices?”
Lusk does not expect any surprises coming out of USDA’s WASDE report — if it will even be considered.
“Nobody’s going to listen to the yield forecast right now. We’re going to have a planting progress report at month’s end and then the August report is going to have a much better gauge on things,” he said.
“Everything’s looking OK right now. The weather’s been mild. Sure, it’s a little dry in some parts, especially in the western winter wheat belt, but overall if there’s been any problem…it’s been too much rain (in the northern Plains).”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.