Mixed market sentiment in soy complex ahead of WASDE report

Ahead of the USDA’s June WASDE report (TBR: 9th June, 12:05 pm ET), sentiment in the soybean and soybean oil markets remain mixed. The CBOT soybean and soybean oil futures prices (Jul-23) settled at USc 1,363.2/60 lbs bushel and USc 52.5/lb on 8th June, 0.2% and 4% higher than the previous day’s settlement. Short covering by many buyers due to the low prices reached in the previous week, coupled with dry weather conditions despite positive crop planting progress across the US in the past week, resulted in the price rises. The latest USDA Crop Progress Report showed an 8 percentage point (p.p) week-on-week (w-o-w) increase in soybean planted area across the 18 states, with plantings as of 4th June reaching 91% completion. The current figures also represent a 15 p.p rise compared to the 2018-2022 average, exceeding market expectations. However, 62% of the crop was rated in good-to-excellent condition, 3 p.p below the average trade estimate and 5 p.p behind the five-year average. As such, weather patterns in the US will remain a critical watch point for crop progress, with a forecast of incoming rainfall in the Midwest in the coming week likely to bring some relief, according to market sources. A Mintec source added, “price direction going forward all comes down to the weather in the next three months – particularly July/August, which will decide the US balance sheet. Additionally, market participants expect US soybean ending stocks for the 2022/23 season to increase month-on-month (m-o-m) in the June WASDE, with trade estimates averaging 0.223 billion bushels, 18.6% higher than estimates reported in May. Similarly, for the upcoming 2023/24 season, market participants expect ending stocks to be revised higher, with estimates ranging from 0.320-0.375 billion bushels (USDA May estimate: 0.335 billion bushels). However, according to market sources, expectations of a record crop from the 2022/23 season and the upcoming 2023/24 season have limited further upside price movements.