Soybeans Tick Up as US Farm Belt Braces for Heatwave
Soybean futures saw modest gains overnight, driven by signs of demand and the return of hot weather to the US Midwest. The US Department of Agriculture (USDA) reported significant soybean sales to China, Vietnam, and Mexico, while a swathe of states, including Iowa, Wisconsin, and Missouri, are set to experience triple-digit heat indexes throughout the week.
The USDA reported that US exporters sold 198,000 metric tonnes of soybeans to China, 100,490 tonnes of corn to Mexico, 105,000 tonnes of soybean meal to Vietnam, and 132,000 tonnes of corn to an undisclosed destination. This follows a string of substantial sales announced earlier in the week, with China purchasing a further 132,000 tonnes of soybeans and Mexico acquiring 239,492 tonnes.
However, the USDA also reported a decline in corn and soybean export sales for the current marketing year, which ends on 31 August. Corn sales totalled 119,100 metric tonnes for the week ending 15 August, marking a 57% drop from the previous four-week average. While Japan emerged as the largest buyer, with a purchase of 110,900 tonnes, an unidentified country cancelled orders for 141,900 tonnes.
Soybean sales for the 2023/2024 season also dipped to a new low, with cancellations and shifts in delivery dates leading to a net reduction in sales of 43,700 metric tonnes. The Netherlands, Japan, Portugal, Indonesia, and Vietnam all acquired significant quantities, but these were outweighed by a 204,500-tonne cancellation from an undisclosed country, alongside 52,400 tonnes from China.
Despite the dip in current year sales, wheat sales for the week ending 15 August surged to 492,700 metric tonnes, driven by strong demand from the Philippines, Mexico, Vietnam, Colombia, and Panama.
The hot weather forecast is likely to impact crop development in key agricultural regions. While Iowa remains drought-free, 3.4% of the state is experiencing abnormally dry conditions, up from 2.6% a week prior. Illinois, another major producer, has seen abnormally dry conditions rise to 9.4% from 4.6% the previous week.
In response to the market dynamics, soybean futures for November delivery rose by 3¾¢ to $9.65¼ a bushel overnight on the Chicago Board of Trade. Soybean meal fell $1.20 to $302.90 a short tonne, while soy oil added 0.59¢ to 39.57¢ a pound. Corn futures for December delivery gained ¼¢ to $3.93¾ a bushel. Wheat futures, however, fell by 4¢ to $5.31½ a bushel, while Kansas City futures lost 3¼¢ to $5.41¾ a bushel.
The upcoming week will see thunderstorms develop in southern Kansas and western Missouri, posing a threat of lightning. Additionally, scorching temperatures are anticipated in western and central Missouri, with heat indexes reaching 100°F and triple-digit values forecast for the next few days. Similar high heat indexes are expected in northeastern Iowa and southwestern Wisconsin, potentially reaching peak values of 105°F on Monday.
As the US Midwest grapples with both scorching temperatures and potentially damaging storms, the impact on crop yields and future market prices will be keenly watched by agricultural stakeholders and consumers alike.
