US Soybeans Futures Dip Slightly Ahead of, June 2021 Report

Jun 10, 2021 07:12 PM ET
US Soybeans Futures Dip Slightly Ahead of, June 2021 Report
  • Global soybean average prices have declined 23.72% since 2014. 
  • Soybean oil futures closed at a record high of 72.32 on June 9, 2021, with increased demand for biofuel production.
  • Crushed soybean in the US is expected to surge 40%-45% in the FY 2021/22

Soybean prices dropped 1.18% on June 9, 2021, after closing at $1.561.38 (-18.62 points) from the previous day's trading. 

Despite falling 6.34% from its 52-week high of $1,667.12, the July 2021 soybean contract posted an annual change of +82.6%.  

On June 10, 2021, the US soybeans contract opened lower at $1,561.25. The prior decline of the commodity’s price was attributed to weather concerns in the Great Plains (north of the US), Midwest, and Chicago.

Falling prices

Since 2014, the average global prices for soybeans have dwindled from $485 per metric ton (mt) to $369 per mt in 2019 (-23.72%). In 2020, prices were supposed to hit $390 before soaring to $442 per mt in 2025. 

Average soybean prices per mt

Average soybean prices per mt

According to the US Department of Agriculture (USDA), the first soybean condition estimate- for the good/excellent segment in 2021 stood at 67%. This estimate was 5% less than that of 2020 that hit 72%.  

As of June 6, 2021, out of the 90% soybean crop planted in the US from a 5-year average of 79%, about 76% of the crop has emerged. 

USDA may give lower projections for corn, soybeans, and wheat for June 2021. Wheat futures fell 0.4% on June 10, 2021, with a ½ a bushel trading at $6.79. The contract had closed 0.4% lower on June 9, 2021.

On the Chicago Board of Trade (CBOT), soybean futures declined 0.1%, where a quarter a bushel of the commodity traded at $15.61 (by 0126 GMT). 

The USDA is expected to give the monthly global supply/demand outlook on June 10, 2021. Brazil’s corn supply has been affected by drought with corn futures dropping 0.1%, for a ¼ a bushel at $6.90. The corn futures had closed trading with a 1.6% decline on June 9, 2021. 

In the CBOT, soybean oil futures soared 1.26% to 72.49, while meal futures added +0.03% to trade at 386.50 on June 10, 2021. 

Biofuel expansion projects 

Increasing production and demand for biofuels in the US have positively affected the agricultural supply and value chain. 

To help achieve President Biden's goal of realizing 100% clean energy in the American economy, the Department of Energy (DoE) announced a $35 million fund. The fund seeks to support at least 15 research projects on the manufacturing of biofuels to speed up production and lower carbon dioxide emissions.

Soybean oil futures for July 2021 (ZLN2021) closed at a record high at $72.32 on June 9, 2021, after it hit a low of $26.84 on April 29, 2020. 

Crushed soybean in the US is expected to surge 40%-45% in the FY 2021/22 as compared to the previous average range of 30%-35%. Growing biofuel demand will also increase the production of vegetable oils by 2023. Analysts' estimates put renewable diesel at a four-fold growth rate by 2022, from 550 million gallons to approximately 2 billion gallons. 

In 2021, this biofuel production rate is projected to reach 750 million gallons, with the total US soybean production standing at 112.5 million tons as of 2020. 

Ahead of the WASDE report in June 2021, the total production of soybean in America is expected to rise 6.53% from 4.135 billion bushels in 2020 to 4.405 billion bushels in 2021. 

Technical analysis

After the futures price broke through, resistance at the 1459.7 level back on April 20, 2021, dropping on May 13, when it became overbought after the strong volume-supported uptrend.

The bullish wedge formation started at the break of June and continued despite June 7th closing in a bearish candle at the 1560 level. With the low volume and RSI at 57, it is likely to retest the recent high of 1623 but not very likely to break through it.

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