Soybean futures settled the Monday trading session at their highest levels in nearly three weeks. The agricultural commodity has been enduring a fund-driven selloff this month, paring some of its gains from its impressive 2020 rally. Is this the beginning of a resurgence heading into 2021?
January soybean futures picked up $0.0925, or 0.8%, to $11.6975 per bushel at 19:38 GMT on Monday on the Chicago Board of Trade (CBoT). Soybean prices are coming off a weekly gain of about 1%, adding to their 2020 toll of more than 22%.
Crop prices had traded higher in overnight trading, mainly because of sizeable Chinese demand and dry weather conditions in South America, particularly Argentina and Brazil.
But soybean could be in the early stages of reigniting its bull run after the US Department of Agriculture (USDA) forecast that the world’s second-largest soybean producer is running low on the crop. According to the December 2020 WASDE Crop Report, USDA researchers projected that ending stocks would fall from 190 million bushels to 175 million bushels.
In global soybean markets, world ending stocks are estimated to be 85.6 million metric tons, which is slightly higher than the expectation of 85 million metric tons.
In a separate report, the USDA predicted that 2021 soybean prices will be $10.40 per bushel. However, other market analysts believe prices could test $11 due to strengthening demand — at home and abroad.
Jason Roose, U.S. Commodities, thinks the USDA report is somewhere between neutral and negative, telling Successful Farming:
“The endin/g stocks were left unchanged on corn from last month and soybean stocks were lowed 15 mln with an increase in domestic crush and not an increase in exports, which was considered a surprise by trade estimates. Feed and ethanol demand all were left unchanged on corn also. All eyes will be focused on the weather in South America, U.S. dollar, and the fund positioning into the end of the year.”
A lower buck has supported soybean prices, too. The US Dollar Index, which gauges the greenback against a basket of currencies, fell 0.27% to 90.73, from an opening of 90.98, on Monday. A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
In other agriculture markets, January corn futures added $0.01, or 0.24%, to $4.245 per pound. January wheat futures plummeted $0.1775, or 2.89%, to $5.9675 a bushel. March coffee futures dipped $0.005, or 0.04%, to $1.261 per pound.