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The hashtag #Soybeans was trending on X (Twitter) today, but not for a good reason. Soybeans have tumbled 4% so far in 2024 - beans' worst start to a year in exactly 40 years. Monday's low of $12.36/bu is the most-active contract's lowest since Dec. 2021. Beans are now in oversold territory after today's flurry of selling activity as a result of South American weather and Poor Soybean Exports.
Today's movement seems to be primarily motivated by the "New week, same story" mantra. Traders continue to await a fundamental spark from the USDA on Friday’s USDA data dump which will give us a good indication of market direction until we get deeper into the 2024 acres debate. We will see releases of the results of its latest quarterly grain stocks survey, small grains seedings survey, final 2023 production report, and updated domestic and global balance sheets. The focus will then shift to Brazil’s winter corn crop, and to discussions about the 2024 acreage for the U.S. growing season.
The rains continue to fall in previously dry areas of Center-West and northeast Brazil. We expected the pattern to shift drier again for these regions this week, but the drier pattern now looks to delay into at least the 6- to 15-day period. The bottom line is that the bulls currently lack a story line for soybeans, allowing them to give way to the broader commodity deflation trend that’s been in place for much of the past year and a half. That story line may return if harvest results add fresh fodder at some point, but for now, that’s not the case. CONAB will also update their Brazil yield expectations on Wednesday.
Weekly export inspections this morning showed decent corn sales, poor soybean inspections (lowest since Sept), and outstanding wheat inspections (highest since July on large PNW shipments to China). Marketing year to date soybean export inspections fall short of the seasonal pace needed to hit USDA's target by 57 million bushels, versus being short by 36 million bushels the previous week. Will USDA cut exports on Friday? Marketing year to date corn export inspections exceed the seasonal pace needed to hit USDA's target by 3 million bushels, after being short by 5 million bushels last week. No changes expected on Friday. Marketing year to date wheat export inspections fall short of the seasonal pace needed to hit USDA's target by 51 million bushels, versus being short by 59 million the previous week. No changes expected to target Friday due to recent Chinese sales of SRW.
Turn-around-Tuesday price action is the likely (and optimistic) scenario for tomorrow, continuing the theme of recent weeks.
Funds were thought to have been all sellers today.
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