With U.S. soybean carry-out approaching unsustainable levels (sub-100 million bushels), questions are being asked as to whether or not soybean meal prices are at a point where demand rationing is starting to take place.
While past performance is not necessariliy inidcative of future results, the two graphs below attempt to give some historical perspective on what soybean meal price levels are required to initiate the rationing process, as well as the potential impact on soybean crush.
July soybean meal prices are approaching the $460/short ton level, already exceeding the 2012/13 crop year when July soybean meal eventually went off the board at $535+ per ton. Likewise, this year’s July contract is currently near 2008’s July soybean meal expiration value of $453.50.
USDA is preparing for a data dump of sorts on Tuesday. The World Agricultural Supply and Demand Estimates (WASDE), Crop Production, annual Crop Production, Grain Stocks, Winter Wheat Seedings, and six other reports will be published in the 12 o’clock hour.
It’s tough to say what the biggest report will be, but Brian Basting of Advance Trading, Inc. is keeping an eye on several of these, including the final size of the 2020 corn, soybean and wheat crops.
“The trade estimate that came out the end of last week are looking for slightly smaller production estimates for corn and beans,” he said. “About 15 million bushels smaller on soybeans and about 75 million bushels smaller in corn.”