In W26 in the soybean landscape, Tridge’s analysis indicates that drought conditions continue to pose a significant risk to the United States (US) soybean crop, with the latest reports from the National Drought Mitigation Center indicating a worsening situation in the Midwestern states. Currently, 57% of the soybean crop is impacted by drought, an increase of 6% WoW. The crop condition ratings by the United States Department of Agriculture (USDA) reached the lowest levels in 30 years, with only 54% of the soybean crop rated as good to excellent. Industry projections for soybean production have been revised downwards by around 2-5% due to ongoing drought challenges. Tridge's forecast suggests a soybean crop of about 4.3 billion bushels, 4% below the USDA estimate and 2.5% below the three-year average. Adverse weather conditions led to bullish market trends, with increased prices in Chicago soybean futures. On June 21, the most-active soybean contract on the Chicago Board of Trade (CBOT) increased by 0.2% to USD 13.45-3/4 per bushel. In contrast, Brazil, the second-largest corn supplier globally, is expected to increase its harvest and could benefit from supplying more soybeans to key markets like China, especially as Argentina faces production challenges. The high temperatures and rains in Brazil have caused delays in harvesting, but operations are expected to resume on schedule. However, if substantial rainfall doesn't occur soon in the US, further downward revisions in crop production are anticipated, which could keep soybean prices high. Stakeholders should closely monitor weekly developments and upcoming USDA outlook reports for potential impacts on the market.
The USDA reports that US soybean export inspections were pegged at 141.16 thousand mt in the week ending Jun-22, a decrease of 38.39 thousand mt WoW and 335.79 thousand mt YoY, with shipments mainly destined for Mexico and Japan. So far in the 2022/23 season, US soybean export inspections amounted to 49.165 million metric tonnes (mmt), down compared to 51.436 mmt in 2021/22. The USDA further indicates that 50% of US soybean was classified as good to excellent, down 3% WoW, with 96% emerging, up compared to 89% on average. Also, 10% of US soybean was blooming, above the normal rate of 9%. The Foreign Trade Secretariat (SECEX) reports that, until W4 of Jun-23, the daily average of Brazil’s soybean exports stood at 717 thousand mt, a slower pace compared to 798.3 thousand mt registered until W3 of Jun-23 but up compared to 475.7 thousand mt achieved in Jun-22. Until W4 of Jun-23, Brazilian soybean shipments amounted to 11.47 mmt, up compared to 9.99 mmt shipped throughout Jun-22. According to TF Agroeconomia, in the soybean market in the state of Mato Grosso do Sul, prices increased by USD 0.41/bag, reaching USD 25.41/bag in Dourados, USD 25.20/bag in Maracaju, USD 24.99/bag in Sidrolândia, USD 25.61/bag in Campo Grande, and USD 24.79/bag in Chapadão do Sul. However, prices are currently falling again, leading to slow business. In other regions, such as Campo Verde, Lucas do Rio Verde, Nova Mutum, Spring, Rondonópolis, and Sorriso, prices experienced decreases ranging from USD 0.17-0.23/sack. Meanwhile, in Matopiba, the market also registered fluctuations but remained on par with other regions in terms of sales percentage.
Lastly, in the first five months of 2023, Vietnam’s soybean imports amounted to 877.69 thousand mt, valued at USD 587 million, down 4% in volume and 5% in value compared to the same period in 2022. In May-23, Vietnamese soybean imports totaled 140.9 thousand mt, valued at USD 86.38 million, down 40% MoM and 25% YoY in volume and 44% MoM and 37% YoY in value. Notably, in the Jan-May period, Vietnam increased soybean imports from the US market, accounting for 50% of total imports at 444.03 thousand mt. Except for Jan-23 and May-23, which recorded a decrease of about 40%, all the remaining months recorded an increase of 60% or more, with imports from the US increasing in Feb-23 by 294%. Meanwhile, in the first five months of 2023, the remaining markets, Brazil and Cambodia, all decreased by 34% and 94%, respectively in volume compared to the same period in 2022. Prolonged dry weather in the US Midwest is causing concern for soybean production, especially in major producing states like Illinois, Indiana, and Michigan. The potential decline in US soybean production may have a ripple effect, negatively impacting Vietnam's soybean imports and potentially leading to higher global soybean prices. The soybean price recorded a significant increase of USD 24/mt at the Hanoi Commodity Exchange (MXV), reaching the highest level since early May, indicating the market's response to the potential supply shortage.
