It is not a secret that soybeans is widely used worldwide, from food industry to motor industry (the latter uses it to produce bio-fuel).
Still, soybean is a commodity traded in international commodity markets around the globe. The USA and Brazil are the world's leading producers and exporters of soybean.
Let's have a look at the current situation and the near-term prospects in the market of soybean futures…
Traders on USDA's Reports and Supply-Demand Ratio
Now, when the details of the USDA's November report are unveiled and we know the global supply-demand ratio and other major figures, it seems to us that the USA is temporary of the track when it comes to driving the international market of soybean. At this point, South America is turning into a major power and driver in the market. Brazil is gradually outpacing the USA, simultaneously becoming number one. The export of soybeans form Brazil has been higher than the one from the USA for a couple of months, Masterforex-V Academy reports.
As of November 8th (the day the USDA published its report), the price of the soybean futures reached 1295,7 dollars per bushel.
Brazilian problems affect the entire market. The sowing campaign in Brazil is underway and seems to be rather successful. As of Nov 1st, 48% of the sowing campaign was completed. Conab, the local agency, producted that the 2013-2014 harvest would reach 87-89.7 million metric tons (the USDA's forecast is 88 million metric tons). The major bullish factor is the expansion of soybean acres.
Still Brazil may have the same shipping problems next year, which will affect the market even more. Another problem is that the local soybean refining industry is lagging behind dramatically.
At the same time, the November forecast published by the USDA seems to be influencing the market.
In particular, the USDA expects the local (US) soybean production to reach 88.6 million metric tons, which is 3.3% higher than last year's figures.
The global production is expected to reach 283,5 million metric tons, which is 0.6% above September's forecast.
As of October 25-31, the net sales of soybean for delivery in 2013-2014 reached slightly over 1 million metric tons. The export is 2 million 159 thousand tons.
Fundamental Factor for Trading Soybeans
The factors can be divided into 2 groups:
The following factors support the market:
The expected decline of soybean inventories in 2013-2014.
The high level of export sales in the USA in late October.
Higher global export.
The following factors exert pressure on soybean prices:
Higher production forecasts for the USA and the entire world
Excessive supply
Successful sowing campaign in Brazil
The bottom line: If to take all the mentioned information into account, we can conclude that soybean prices will likely be fluctuating within the 1250-1300 range since the situation is controversial and the contradicting factors create a balance.
