Afternoon Soybeans: Bean rally attempt fails.

The soybean market made run back over $16 in the August contract and $15 in the new crop but could not hold those trades and reversed leaving large spike reversals on the charts.  The markets had plenty to digest today.  There were no overnight deliveries against the July beans or products.  Weekly export sales were disappointing, featuring more old crop bean cancellations and a dismal sales report all around, with the exception of wheat.  The USDA quarterly stocks report data came in close to expectations at 971 million bushels vs. 965 million expected.  The surprise of the day came in the acreage report where bean acres fell short of the average trade guess by over 2 million acres at just 88.3 million.  

Beans initially rallied on the bull acreage surprise but that effort failed and when you cannot hold a rally on bull report, it is a big red flag. Some of the selling around beans was likely tied to fund/spec positioning around the month/quarter end. Some of it was likely tied to the moisture showing in the weather maps for the next week. You likely ran into some open hedge orders on the rally. At the day's end, August beans settled 11 lower (41 off the high) and the November contract settled 20 lower (49 off the high).

Tomorrow will feature additional position squaring around the new month/quarter and ahead of the holiday weekend where weather developments will be monitored closely. The grains will be closed for Independence Day on Monday and won't reopen until Tuesday at 8:30 cst in what promises to a weather charged environment.

In the product trade, meal continued to firm with spread leadership from the front months while the new crop contract settled a few ticks lower. Bean oil had an ugly day with a strong negative influence coming from the energy sector which was sold aggressively. As a result, the oil share fell to close to a three-month low. Board crush margins were down 3 in the August to $1.35/bushel and down 8 in the new crop to $1.46/bushel.

Here's what the report said: soybean planted area for 2022 is estimated at 88.3 million acres, up 1 percent from last year but well below the average trade estimate for 90.45 million. Compared with last year, planted acreage is up or unchanged in 24 of the 29 estimating States.

From the March intentions of 90.96 million to today, IL picked up 200,000 additional acres while most other states trimmed back their plantings. AR lost 50,000 acres, IN lost 150,000, IA lost 100,000, MI lost 100,000, MN lost 500,000, MO lost 200,000, NE lost 100,000, ND lost 1.1 million, OH lost 150,000, SD lost 200,000, and WI lost 50,000. As of the timing of this acreage survey there were still 15.8 million bean acres left to plant. Due to the wet conditions in the Dakotas and MN, NASS will resurvey producers in those states and if the newly collected data justifies any changes, NASS will publish updated acreage estimates in the August WASDE.

The implications of the smaller acreage base on the new crop S&D are significant. Using the latest USDA balance sheet projections and updated acres, you would have a sub 150 million bushel carryout for next year.
June 22
Soybeans 21/22 22/23
Planted 87.2 88.3
Harvested 86.3 87.5
Yield 51.4 51.5
Begin Stks 257 205
Production 4435 4506
Imports 15 15
Total Supply 4707 4726
Crush 2215 2255
Exports 2170 2200
Seed 106 102
Residual 12 23
Total Use 4502 4580
End Stks 205 146
S/U ratio 4.6 3.2

Soybeans stored in all positions on June 1, 2022 totaled 971 million bushels, up 26 percent from June 1, 2021, and close to the average trade estimate of 965 million bushes. On-farm stocks totaled 331 million bushels, up 51 percent from a year ago. Off-farm stocks, at 640 million bushels, are up 17 percent from a year ago. Indicated disappearance for the March - May 2022 quarter totaled 960 million bushels, up 21 percent from the same period a year earlier

Old crop bean sales this week were net negative 120 tmt, a marketing-year low. Increases were primarily for the Netherlands (149, including 138 from unknown), Japan (49, including 48 from unknown), Canada (20), Costa Rica (17), and China (16, including 46 switched from Italy, 19 switched from unknown, and decreases of 66), were more than offset by reductions primarily for unknown (288), Pakistan (55), and Italy (46). New crop sales of 128 were primarily for unknown destinations (70), Saudi Arabia (40), Barbados (7), Panama (6), and Indonesia (4).

Combined old crop soybean sales plus shipments marketing year to date now total 60.118 mmt or 2.209 billion bushels exceeding the USDA's marketing year projection of 2.170 billion bushels. China/unknown account for 5.762 mmt or 68% out of the 8.389 mmt remaining unshipped old crop commitments. US beans are currently $22-$27/mt more expensive than Brazil fob to fob for July/August, and we have a $10/mt freight disadvantage on top of that. There is risk that we see additional cancellations that would add back some old crop supply to the pipeline. There are 9 weeks remaining in the marketing year. New crop sales commitments total a record for this date of 13.498 mmt compared to 9.398 mmt this time last year - China/unknown account for 11.380 mmt or 84% mmt of these new crop commitments.

Elsewhere in the news, USDA census crush for May comes out tomorrow after the close. The data is expected to show crush of 181.9 mb on average, above the 180.9 mb processed in April but would be a fifth consecutive monthly decline in average daily crush rate. Oil stock are estimated at an eight-month low of 2.341 bln lbs, down from 2.424 bln bls in April.

Stats Can Canadian crop plantings comes out Tuesday morning. The avg. trade estimate on canola acres is 21.3 mln compared to 22.5 mln in 2021. Soybean acres are est. at 5.2 mln compared to 5.3 mln in 2021. All wheat acres are est. at 24.7 mln compared to 23.4 mln in 2021.

Soybean Basis:
Location Spot
US Gulf steady +77
Brazil Paranagua up 5 to +160
Sioux City, IA up 20 to +45q
Mankato, MN steady +20q
Decatur, IL steady +140q
Claypool, IN steady +50n
Columbus, OH steady +75q