Soybean prices are seeing some momentum on Friday, both before and after USDA released its latest crop production reports. Soybean prices seem unstoppable, and there are several factors supporting them this fall. Chad Hart of Iowa State University thinks those factors could continue to support soybean prices in the near-term.
“The idea is you're looking at a crop that has gotten smaller over the year, so you're looking at export numbers that are sort of off the charts right now,” he says. “We've already booked 1.4 billion bushels for export. And when you look at domestic crush, feeding that livestock industry, all of this is supporting those prices that we're seeing today.”
Hart says similar factors are playing into the corn market right now, especially since USDA cut grain stocks in its September 30 report. That report is still getting buzz in the markets, as now many are asking one major question: when is USDA’s final crop production number actually final? Hart says the answer to that is tricky.
“January is no longer the final say,” says Hart. “I think what you saw USDA do this time around, they've been doing it for soybeans for the last few years, and they finally did it this year for corn. The language that they used suggests we can expect them to do this from here on out. The idea is that we will adjust those final numbers based upon the final stocks report that we get in September.”
Waiting nearly nine months to know the final production numbers on last year’s crop is frustrating to those in the market, but Hart says the January number is what traders will have to trade.
“We have to trade them because those are the best numbers we have at the time,” says Hart. “But those don't represent, if you will, the truly final numbers. And we've sort of got to recognize that we've always taken January as being gospel. It never was; it was the best they could do with the time in before this. We had the stocks report that generally didn't move us that much. Now we're finding out that due to the size of the crops, we're dealing with the amount of other uses that we're finding for these crops, and especially the variability we're doing on the feed side as far as using different feed ingredients. It has made our estimates a little bit less reliable as we move over time, and therefore the need for more adjustments afterward.”
A surprising Hogs and Pigs report out of USDA was shrugged off by the market. Why? Lee Schulz explains in the marketing roundtable on U.S. Farm Report.
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October 10, 2020 at 03:36AM
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As Soybean Prices Surge, These Fundamentals Could Fuel Prices Even More - Agweb Powered by Farm Journal
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