Spotlight on soybean market

• The SAFEX soybean market posted gains in yesterday’s trade session, supported by bullish sentiment emanating from higher Chicago soybean prices, commercial buying interest, as well as the weaker domestic currency against the US Dollar.
• In the fields, the weather has cleared up over South Africa’s soybean growing areas, therefore the harvest process could gain momentum within the next eight days, particularly around Mpumalanga province. As highlighted in yesterday’s note, the areas that have harvested received average yields, which supports the National Crop Estimates Committee’s production forecasts of a record 1.4 million tonnes in the 2017/18 production season.
• This optimism in soybean production is not limited to South Africa. A number of countries such the US, Brazil, China and Canada are in good shape, with 2017/18 harvest estimated at 119.5 million, 116.0 million, 14.3 million and 7.7 million tonnes, respectively, according to data from the International Grains Council (IGC).
• From a global perspective, the uptick in soybean production in these particular countries was, however, overshadowed by the decline in Argentina, Uruguay, Paraguay and India. This is evident from IGC’s data which shows that 2017/18 global soybean production at 338.8 million tonnes, down by 3 percent from the previous season. Moreover, the ending stocks are estimated at 41 million tonnes, down by 15 percent from the 2016/17 production season. This provided the near-term support to the market.
• Looking ahead, the path could soon change, as IGC forecasts a 5 percent year-on-year uptick in 2018/19 global soybean production to 355 million tonnes. This is underscored by prospects of a recovery in Argentina, Uruguay and India production, which in turn is supported by expectations of favourable weather conditions and an expansion in area plantings. Moreover, Brazil’s harvest is set to increase further by 3 percent from the 2017/18 production season to 119 million tonnes.
• With that said, it is still early in the season, more will unfold over the coming months. Some of the countries in the northern hemisphere are at initial stages of planting the 2018/19 crop.

Read full report by Wandile Sihlobo below:

Agbiz Morning Market Viewpoint on Agri-Commodities 03 May 2018