Soybean prices plunged over 5% yesterday (30 June) to $11.57 per bushel after US Department of Agriculture data showing that farmers had planted an estimated 84.84 million acres, up 11% compared with last year and a record amount of land. According to the USDA planting of soybeans was 92% complete by mid-June, well ahead of last year, when wet weather delayed planting in much of the country. With soybean prices more favorable than corn prices going into the planting season, agricultural producers planted less corn this year.
Meanwhile, soybean stocks fell by 7% from a year earlier to 405 million bushels, higher than market analysts had expected who projected soybean stocks would fall to 387 million bushels, the lowest since 1977. Soybean stocks have been declining amid rising demand by US crushers, while demand for feed from livestock has been tempered by the deadly PED virus that has swept through the swine population.
Adding an extra level of uncertainty, US imports of soybeans are thought to be playing an unusually large role at the moment, with volumes expected to hit a record high in 2013-14 as the US seeks to replenish its oversold domestic supplies. The monthly Wasde crop report, unveiled by the USDA on 11 July is likely to clarify whether the higher-than-expected stocks data were down to strong imports or not.
With so much uncertainty going into an important part of the US growing season it is perhaps no wonder that this data has such a significant impact on the price. As the chart below shows traders typically underestimate stock levels going into this period. Soybean prices, now down over 25% since the start of June could see further sharp falls through July if history is any guide with prices bottoming out around October.