Soy: A bear market with the oil industry in negative margins in the US

Published Mar 26, 2023

Tridge summary

The article highlights the bearish market trend for soybeans, with prices for existing beans and future short positions falling as the market anticipates the price of the new crop. The decline is further accelerated by the ongoing soybean harvest in Brazil. The soybean oil industry is facing negative milling margins, leading to a significant drop in soybean milling volumes, marking the worst two-month period in the industry's recent history. This situation results in an increase in fixed costs, making it more expensive to process soybeans. As producers hoard their grain and wait for market conditions to improve, it leads to insufficient volume for processing and challenges in meeting external sales commitments.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Soybeans are entering a bearish market or new crop mode. As the days of the calendar go by, the prices of available soybeans and future short positions, March and April, are falling in search of the price level of the new crop. The bearish scenario for soybeans in Chicago is added, given the steady progress of the soybean harvest in Brazil. The mid-week close for soybeans on the Matba-Rofex indicated an available price of $396 per ton, while for May the new crop closed at $381 per ton, a drop of $15 per ton between the soybean price old and new harvest. Negative margins for grinding To the drop in Chicago we must add the negative milling margins of the soybean oil industry, which play as a potential bearish correction factor for the market. The available soybean market supply is very low and is not enough to compensate for the daily milling volumes. As a comparison parameter, let's see how soybean milling has behaved in the first three months of the year, and its comparison with ...

Source: Campototalweb