The US CBOT soybean futures price climbed by 4.7% month-on-month (m-o-m) to USc 1,529/ 60 lbs Bushel on 12th January 2023, in line with a bullish World Agricultural Supply and Demand Estimates (WASDE) release. In the January 2023 WASDE report, the US soybean 2022/23 marketing year (MY) crop estimate was revised lower by 1.6% from the previous report to 4.3 billion bushels, due to reduction in harvested area. This also represents a 4% decline year-on-year (y-o-y) in production. This bullish report, a surprise to the market, combined with concerns about the Argentine crop due to adverse weather conditions, has also kept the US CBOT futures price higher by 12% compared to the same period in the previous year.
The ongoing drought conditions in Argentina has led to the 2022/23 MY crop estimate for that country being revised even lower than market participants expected, with the USDA slashing estimates by 8% m-o-m. While a record Brazilian soybean crop could bring slight relief to overall South American production (+16.4% y-o-y), a Mintec source stated that, “it may be too soon to get excited about the Brazilian crop, if weather patterns were to change.”
Also, the US CBOT soybean oil futures price has remained up by 8.7% y-o-y at USc 63/lb on 12th January. Increased domestic consumption, particularly for biodiesel usage, has continue to give upward momentum to the US soybean oil price, with the US maintaining its biodiesel usage forecast, limiting available supply for exports. Similarly, Brazilian soybean oil exports could be pressured as domestic demand is expected to rise in line with an increase to its biodiesel blending mandate from 10% to 15%, effective from April 2023.
