We are now at a stage in the production season and marketing year when we see a shift in fundamental focus. Until this point, the majority of the market focus has been on production. The trade is still very interested in crop reports and what we are seeing for yields, but the question now is if we will see demand rationed to a point where ending stocks might build.
This is especially the case on soybeans, where ending stocks are already well into a rationing position.
The new crop stocks-to-use on soybeans is currently predicted at 3.5%. This is a slight uptick from last year, but not enough to provide a cushion if we see demand build. This means we will need to maintain elevated futures to curb usage for at least another year and likely beyond.
One factor that is tempering new crop soybean values is the forecasted increase to the Brazilian crop.
The USDA is ...