The US Chicago Board of Trade (CBOT) soybean futures price slid to USc 1,515/60 lb bushel on 19th January. This is the lowest level since the release of the WASDE report on 12th January. The fall was due to forecasts of improving weather in Argentina following cuts to the country’s production in the January report.
Argentinian weather has been the major price driver in the soybean market, with drought conditions leading to a downward revision to crop estimates. According to the Rosario Board of Trade (BCR), the Argentinian soybean crop for the 2022/23 marketing year (MY) (December to November) is expected to decline by 12% year-on-year (y-o-y) to 37 million metric tonnes. The US crop estimate for this season was also revised lower by the USDA, down by 1.6% from the December 2022 estimate, further compelling bullish sentiment in the soybean market. However, a positive outlook to rainfall for the rest of the month in Argentina has now pressured soybean prices, as this is expected to limit further crop losses. Also, expectations of a record crop in Brazil, another major South American producer, has capped further price gains.
Weather patterns in South America will continue to be a watch-out factor for soybean and soybean oil prices. Prices are likely to remain firm into the coming week due to expectations of a slowdown in demand amid the Chinese New Year holidays on 23rd and 24th January. General uncertainties about Chinese demand after the lifting of the country’s zero-COVID policies and weak economic growth will also likely cause prices to remain firm.