US soybean futures riding high on weather concerns, tight Brazilian supplies

New Delhi — US soybean futures prices surged to their highest level in seven years on weather concerns in the Midwest, coupled with Brazilian supply woes, market sources told S&P Global Platts April 21.

CBOT May soybean futures gained 18 cents on previous close to $14.9088/bushel 1600 GMT April 21, which is up 86% year on year.

The soy futures for nearby deliveries have been on the bullish run since the unfavorable weather conditions in the prime soybean producing regions of the US were forecast April 19.

Forecast for the week ending April 24 across the Central US has trended a bit colder since April 16, with subfreezing temperatures expected across most of the Plains and the Midwest, weather agency Maxar said April 19. Snow is expected across the Central Plains and the southern Midwest for the week ending April 24 and while the snow will melt quickly, it will further slow fieldwork, Maxar said.

So most likely, the US soybean planting gets delayed by at least a week in April, an Ohio-based agricultural analyst said.

Delayed beans planting makes the crop vulnerable to weather extremes during the maturation phase in August and is likely to impact overall output projection for 2021-22 marketing year (September-August).

According to S&P Global Platts Analytics, the US is forecast to produce 4.48 billion bushels of soybeans, up 8.3% on the year from the acreage of 88.5 million acres in 2020-21.

However, the projections assume normal weather conditions until the harvesting starts in September.

Brazilian Supply Issues

Delayed planting and harvesting in Brazil -- the world's top soybean supplier -- have supported the international prices since the last quarter of 2020.

Typically, Brazilian soybean harvest starts reaching the market for domestic sales and exports by January end. However, rain-hit harvesting delays since January led to extremely tight supply situation in the South American nation.

As a result, China -- the world's largest beans importer -- had to turn to the US-origin beans in the first quarter of 2021, which pushed the US soybean prices upwards.

According to China's customs department, the nation has imported 21.2 million mt of soybeans in Q1 2021, up 19% year on year, with the US soybeans accounting for 90% of the shipments and Brazil's share was 5%.

In stark contrast, Brazil used to dominate China's soybean imports in the first quarter of previous years with average market share of over 80%.

According to market analysts, the US soybean futures is likely to cross $15/bushel benchmark in coming weeks with ever-tightening global supplies and robust domestic and export demand.