USDA’s Agricultural Outlook Forum may trigger violent fluctuations in soybean prices

At present, the weather in South America is still the key factor affecting the trend of soybean prices. As of the closing on February 18, the Chicago Futures Exchange (CBOT) closed above $16 for the March soybean period and above $6.50 for the March corn period. The popularity of agricultural products market is still bullish, because the scale of crop production in South America is worrying, which helps to promote the rise of soybean prices, and also supports the strengthening of the prices of other agricultural products such as corn.

Matt Bennett, an American analyst, said that at present, sharp price fluctuations have become the main feature of the commodity market, but in terms of soybeans, it is mainly due to Brazil’s production problems and US demand. On February 9, the US Department of agriculture predicted that Brazil’s soybean production was 134 million tons in its monthly supply and demand report. The next day, Brazil’s national commodity supply company (conab) predicted that Brazil’s soybean production was only 125 million tons, and the output estimates of some private institutions (such as Brazil’s home agribusiness company) were as low as 122 million tons. USDA and conab’s production forecasts differ by 9 million tons. There is no doubt that the final production scale will be very important. Bennett said that the USDA’s estimate of Brazil’s soybean production is the ceiling of all current forecasts, so futures exchanges and analysts will pay close attention to the South American soybean production forecast data updated at the USDA’s annual Agricultural Outlook Forum this week.

Generally speaking, the Agricultural Outlook Forum in February each year will not attract much attention, but this year’s situation is different. Considering the wide gap between the expectations of the U.S. Department of agriculture and other agencies for Brazilian soybean production, this year’s Agricultural Outlook Forum may attract more attention and market reaction.

This year’s USDA Outlook Forum will be held from February 23 to 24. Andrew Jackson, an analyst at American farmers’ hedging company, said that usually after a report is published, people watch it for up to ten minutes, and then do something else. But this year’s report hasn’t come out yet. People can’t sit still. This year is not 2018 or 2017, when the market performance was stable. The market has been volatile this year, so a little bit of good or bad news can cause prices to move in one direction or another. Due to the overall strength of the commodity market and the high morale of bulls, some analysts even expect the price of beans to rise to $18. Whether it rises to $18 or not will affect this year’s spring sowing plan.

Source: Master Boyi

Post time: Feb-23-2022