Soybean prices continue to struggle
Soybean prices have trended lower of the past month with January futures now back in near the early October lows, said a University of Illinois agricultural economist.
The USDA's November forecast of the U.S. average soybean yield of 41.3 bushels was 0.2 bushels below the October forecast and 2.3 bushels below the 2010 average, Darrel Good said.
"The forecast represents the lowest yield since 2008 and the second lowest since 2003. Like corn, the lower yield and production forecast generated little price strength due to a 50-million-bushel reduction in the forecast of exports and a 35-million-bushel increase in the forecast of year-ending stocks," he said.
He added that the pace of U.S. soybean exports remains well below that of last year. However, the anemic pace of new sales in the last two weeks of October was followed by large new sales in the week ended Nov. 3.
"Production prospects remain generally favorable in South America, although USDA made a modest reduction of the forecast of acreage in Argentina and Paraguay. Those reductions were offset by larger yield forecasts for Brazil and Paraguay," he said.
"Soybean basis remains near typical levels and spreads are generally large. The January-July spread, for example, is near 30 cents, compared to only about 5 cents in early September. The weak basis and the relatively large carry reflect the generally weak demand situation," he said.
For now, January soybean futures are holding just above the early October lows while December corn futures are well above the early October lows, but near the low end of the recent trading range.
"The recent sideways trading pattern might persist for an extended period, but the deterioration of market fundamentals suggests that prices could drift lower into the winter months," he said.
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