On Friday, soybean costs jumped after the United States Department of Agriculture (USDA) released the WASDE report.
The soybean futures for March delivery spiked by 0.63% to $1,528.50 per metric ton in the previous session. Besides, analysts projected that soy prices would remain, but fees grew following the release of the WASDE report.
Further, the USDA made significant changes to acreage and yield numbers that reduced the estimates of the 2022 crop. This sent costs higher despite the bearish outlook for soya demand with lowered expectations for its export.
Moreover, the market is anticipated to consider the correlation between the old crop (2022/2023) and the new crop (2023/2024).
Furthermore, prices and futures calendar spreads will balance old harvest supply and demand with the prospects for the new yield to be harvested in the fall.
Besides, the reaction to the January report projects lower soybean rates in the medium to long term. Meanwhile, nearby futures spiked more than the new reap, widening the old and new produce inverse.
Also, the soy area harvest dropped by 0.30 million acres to 86.30 million ac, lower than the analyst’ forecasts. Similarly, the national average yield tumbled by 0.70 bushels per acre to 49.50, leading to a 70.00-million-bushel slide in production.
In addition, soybean exports were revised lower amid continuing US demand weakness.
China’s Soybean Import Grew
On Friday, China’s soybean imports jumped by 19.00% to 10.56 million tons, the highest hit since June 2021. Before the recent report, commodity influxes were below the expected supply, pushing domestic prices to record levels.
Overall, the 2022 imports fell by 5.60% to 91.08 million tons, marking the second full-year decline.
Besides, weaker animal feed consumption affected soybean demand which contracted by 1.00% due to declines in pig and poultry figures. Further, analysts expected volatility in hog prices as importers catch up to get supplies back to normal.
Furthermore, traders stated that low soybean stock is expected to support stronger soybean demand in 2023 as China reopens following strict Covid policy.