Afternoon Soybeans: USDA offsets smaller bean acres with yield increase.

The soybean market had a wild report day performance with a wide swinging 50 cent range in November beans that ended with an outside day higher and a 5 ¾ cent gain.  Beans made their session high leading into the crop report release where the knee jerk response to the data led to a sharp selloff before catching a bid again as the data began to digest and along with leadership from corn, beans managed to rally back into positive territory.  The crop report for soybeans featured production and domestic and global carryouts slightly above trade expectations although our domestic supply is projected to remain extremely tight for the new crop marketing year even with the big crop currently anticipated.   Another supportive element to today's trade was the midday weather maps are hinting at the return of hotter and drier conditions for the Northwestern bean producing states which would not be an ideal setup for filling pods. 

For the week, November beans gained 45 ½ cents, December oil gained 4.00 cents, and December meal added $12.8/ton.

In the product trade, soybean oil shrugged off a bearish supply increase in the crop report and extended its recovery rally to a new high with a .35 pt gain. Malaysian palm oil lent early veg oil support with a 3.3% rally while crude oil offered a negative influence with a $2+ break. Meal managed to gain ground in the oil share spread with $5.5 rally of its own. Board crush margins gained 6 cents to $2.52/bushel in the nearby while the new crop added a dime to its margin at $2.13/bushel.

Here's what the report said:

The USDA lowered old crop exports by 10 mb to 2.160 bb and raised the carryout by a like amount to 225 mb with a stocks to use ratio of 5.0% which is the tightest it's been since the 14/15 marketing year. The acreage resurvey found no changes were necessary for bean acres in MN, but it did reduce acres in ND and SD by 300,000 combined. In the new crop balance sheet, planted and harvested acres were reduce by 300,000 while the yield was increased by .4 to 51.9 bpa to more than offset the lower acres and added 26 mb to the production total of 4.531 bb, a record crop. New crop exports were increased by 20 mb to 2.155 bb. The new crop carryout was raised by 15 mb to 2.45 mb with the stocks to use ratio growing to 5.4%. The average farm price was lower by 5 cents in the old crop to $13.30/bushel and by 15 cents in the new crop to $14.35.

Today's yield estimate included farmer survey results as well as the USDA's satellite based yield model. Next month will incorporate boots on the ground as well with the objective yield field plots.

Old crop bean oil ending stocks were increased by 150 mln lbs on a reduction in biofuel use and the average price was lowered by a penny to 72 cents/lb. The new crop carryout was increased by 150 mln lbs to 1.811 bln lbs from the larger beginning stocks. The only change in the meal S&D was a $10 reduction in the average price of old crop to $435/short ton.

In the world S&D, old crop soybean ending stocks were increased by 1 mmt to 89.73 mmt on a reduction in Brazil's exports. The new crop bean carryout was increased by 1.8 mmt to 101.41 mmt on the larger beginning stocks and bump in Chinese production of 900 tmt to 18.4 mmt. There were no other material changes to the global S&D in beans and only nominal adjustments made to the product balance sheets.

Elsewhere in the news, China's 21st soybean auction of state held reserves sold only 6 tmt out fo 504 tmt offered. The price paid was $743/mt or $20.22/bushel equivalent. In total, the Chinese government has sold 2.49 mmt out of 10.35 mmt of beans offered in auction.

Ahead of Monday's NOPA crush report for July, the average trade guess on crush is 171.5 mb, an increase from 164.6 mb crushed in June and well above the July 2021 crush of 155.1 mb. Oil stocks are estimated to come in 1.713 bln lbs, a 10-month low, down from 1.767 bln lbs in June but above the July 2021 sotkcs of 1.617 bln lbs.

The COT report showed managed fund money for the trade week ending 8/9 had +12.1k corn (net long 142.0k), -5.3k srw (net short -20.3k), -1.9k hrw (net long 8.0k), +2.0k beans (net long 101.5k), +4.3k meal (net long 84.3k), and +69 bean oil (net long 22.2k).

Soybean Basis:
Location Spot
US Gulf off 25 to +225x
Sioux City, IA steady +25x
Mankato, MN steady -5x
Decatur, IL steady +160x
Claypool, IN steady +140x
Columbus, OH steady +55x