Soybean and soybean oil prices rise despite neutral-bearish WASDE

The USDA’s latest WASDE report, released 9th June, highlighted higher US soybean beginning and ending stocks for the upcoming 2023/24 season. US soybean ending stocks estimates for the current season rose 7% month-on-month (m-o-m) to 6.3 million metric tonnes, relatively close to market participants’ expectations as reported by Mintec here.  The m-o-m increase is attributed to lower-than-expected exports from the US in the previous month due to competitive prices from Brazil on the back of the latter’s record crop. The 2022/23 Brazilian crop was also revised higher in the latest update by 1 million metric tonnes m-o-m, to 156 million metric tonnes, while for the 2023/24 season, the projections for another record crop were maintained at 163 million metric tonnes.  

While higher ending stocks supported a neutral-to-bearish market view of the WASDE report, the CBOT futures prices (Jul-23) for soybean and soybean oil settled higher compared to the previous days' settlements, up by USc 23.2/60 lbs bushel and by USc 2.09/lb to USc 1,386.4/60 lbs bushel and  USc 54.59/lb, respectively, on 9th June. The price increases are due to higher demand with market sources also cautious about the EPA (Environmental Protection Agency) ruling for Renewable Volume Obligations (RVO), set to be announced 14th June – a key determinant for US soybean oil supply and demand balance sheet, as this could result in greater reliance on soybean oil. Additionally, weather patterns over the coming months will remain a watch-out factor for US production and prices in the soy complex.