Current US Soybean Price Indicates Modest Chinese Demand for US Imports

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Gro’s stocks-to-use-based price model indicates market participants see much weaker demand for US soybean exports than the USDA estimated in its May WASDE report.

Gro’s Stocks-to-Use vs. Price Model, which is available for users of Gro’s API (see a description of the model on our website), reveals the relationship between US soybean supplies and CBOT futures prices. It produces a linear regression that currently implies the market sees new-crop soybean stocks-to-use at 17.7% based on the $8.76 per bushel CBOT November soybean futures price as of June 9, 2020. That stocks-to-use level is nearly twice the 9.4% level indicated in the May WASDE report.

The larger stocks figure suggests the market doesn’t expect a big increase in US soybean demand from China. At 17.7%, the stocks-to-use figure points to just 1.745 billion bushels of new-crop soybean exports.

In it’s WASDE report released last month, the USDA projected stocks-to-use for corn at its highest level in 28 years. Later this month, on June 30, we’ll discover whether that expectation for high corn stocks spurred US producers to shift any of their late-planted area into soybeans or other crops. Weak soybean prices and the implied expectation for poor soybean exports may have kept farmers from making a shift. And if the USDA demand projections prove true, we could see very high corn stocks and tightening soybean supplies.

The ratio of soybean supplies to demand is an important driver of soybean prices on the Chicago Board of Trade (CBOT). The left chart shows November 2020 soybean futures prices. On the right, US soybean stocks are shown on blue bars along with total soybean consumption on the green line. Click on the image to interact with the charts on the Gro web app.

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.

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