Soybean prices in holding pattern ahead of February’s WASDE report
- Soybean prices are on a tight range around $1400 ahead of February's WASDE report.
- Harvesting in Brazil is gaining momentum as the soybean-growing areas receive drier weather.
- China still has a high appetite for the commodity due to its expanding hog herd.
Soybean prices are in a tight range as those looking to invest in commodities await February’s WASDE report. Analysts expect the agency will adjust Brazil’s production to the upside as harvesting in the country gains momentum. On a 4-hour chart, soybean futures were trading around the $1400 price level.
Upcoming WASDE report
For the investors whose interest in the commodities market, the WASDE report will shape the direction of soybean prices. the US Department of Agriculture is set to release the report later today. Last month, the agency presented a bullish report that pushed soybean prices to a 7-year high.
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To begin with, the USDA lowered its estimates of soybean production for the 2020/21 season. It predicted that the output would decrease by 35 million bushels despite the harvested area rising slightly from the figures in December.
The forecasted drop in crop yield was due to the low output in US soybean-growing regions such as Minnesota, Kansas, and Iowa. In the foreign markets, the agency predicted that soybean output in Argentina would lessen due to the prolonged drought conditions. However, it left its estimates for Brazil’s production unchanged.
In February’s report, USDA is likely to increase its estimates for Brazil’s soybean output. This is due to improved weather conditions in the South American country.
Soybean harvesting gains momentum in Brazil
US soybean prices have had prolonged support from the La Nina phenomenon experienced in Brazil and Argentina in 2020. Besides, the excessive rainfall recorded in January 2021 slowed down harvesting in Brazil. However, the exercise seems to have gained momentum as the Center-West region in the country enjoy drier weather.
According to the AgRural agribusiness consultancy, soybean harvests in Brazil were at 4% as at 4th February. This marks substantial progress from the prior week’s 2%. During the same period last year, Brazilian farmers had harvested about 16% of the cultivated soybeans. Notably, the current pace is the slowest in a decade.
Delay in the availability of Brazilian soybeans has pushed US soybean prices higher. Subsequently, China has been relying on the US to satisfy its immense appetite for the commodity. While the market is set to receive a steady supply of the Brazilian crop in the coming weeks, stockpiles are likely to remain tight. China, which is the largest consumer of soybeans, has been purchasing record amounts to cater for its expanding hog herd.