Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Soybean futures - will they end their losing streak in 2016?

Twitter Linkedin eCard

Soybean futures are on course to end 2015 down by some 14%, a third successive year of decline.

Values have been undermined by another strong year for US production, with South America appearing poised for a strong harvest too early in 2016.

As extra reassurance for buyers, Argentine growers are expected to step up sales of soybeans hoarded as a hedge against a falling peso, after reforms implemented by the new government.

Besides lowering the export tax on soybeans, the government freed the peso, bringing devaluation but cutting the threat of further severe depreciation ahead.

Still, some production fears remain, notably over central Brazilian dryness, while further ahead US farmers are expected to switch some acreage back to corn. Could this prevent soybean futures in 2016 suffering a fourth year of decline?

ABN Amro

"As things stand, we do not foresee a marked upturn in fortunes for grains and oilseeds in 2016. Prices will remain at the current, relatively low levels. Array

Q1 2016: $8.75 per bushel

Q2 2016: $8.75 per bushel

2016: $9.00 per bushel

Forecasts for end of quarter/year, spot New York futures contract

"Elections in Argentina created extra price pressure in the past weeks. The newly-elected president Mauricio Macri is pursuing an agriculture-friendly policy.

"The 2015-16 marketing year is projected to deliver a new record output of 320m tonnes, bringing the production level to 19% above the past five-year average. This increase is mainly being driven by extra production in the US, Argentina and Brazil.

"Against this, consumption is also accelerating sharply and is projected to jump 16% in 2015-16 compared to the five-year average. This brings consumption to 312m tonnes."


"Soy balances in 2015-16 are substantially looser year on year and should limit rallies above $9 a bushel in 2016 with stocks-to-use climbing to multi-year highs of 11-12%. Array

Q1 2016: $8.85 per bushel

Q2 2016: $9.00 per bushel

Q3 2016: $8.75 per bushel

Q4 2016: $9.00 per bushel

Forecasts for quarter average, spot New York futures contract

"The soy market should stabilise in 2016-17 as carryout is expected to peak around 425m bushels and Chinese consumption growth remains on an upward trajectory given local build out of crushing capacity, meal demand and limited internal production.

"Oilseed exports should jump in 2016-17 and crush should continue to grow given a strong RFS2 mandate for biomass-based diesel that is growing from 1.28bn gallons in 2013 to 1.9bn gallons in 2017-18 and promotes greater use of soyoil.

"Planted acreage is likely to grow in 2016 at the expense of corn albeit modestly given a low price. Yields unlikely to be as strong. New-crop cost of production should also rise."


"In Brazil, the world's second largest producer… the initially sluggish planting process is now almost concluded. Array

Q1 2016: $8.50 per bushel

Q2 2016: $8.75 per bushel

Q3 2016: $8.75 per bushel

Q4 2016: $9.00 per bushel

Forecasts for quarter average, spot New York futures contract

"Even if Argentina, the world's third-largest soybean grower, shows a slight decline in production in 2015-16, as expected, starting from last year's record level, more supply could also enter the global market here.

"The global supply of soybeans should remain plentiful and easily satisfy still rising demand.

"China's demand for example should also continue to rise, albeit at a weaker rate than in previous years. The strength of the dollar and the weakness of the real should mean that China is happy to turn to goods from Brazil.

"All in all, we do not expect a significant rise in soybean prices for the time being, given the relaxed supply situation on the soybean market and the lack of tailwinds from the grain markets."

Goldman Sachs

"Weather risks have increased in Brazil over the last few months on dry conditions. Though, with crop progress not far from last year's, significant yield worries are still premature, in our view.

"Globally, with production on trend yields outpacing demand by 2-4%, we expect stocks will continue to build into 2015-16.

"Record 2014-15 production and high South American planting estimates for 2015-16 should keep prices from rising materially. Accordingly, we see prices close to current levels.

"However, we highlight potential downside risks from a sharp pick-up in selling by Argentinian farmers following policy reforms."

Darrel Good, Department of Agricultural and Consumer Economics, University of Illinois

"Soybean prices declined nearly $2.00 per bushel during the 2015 calendar year as a result of record large South American and US crops in 2014 and 2015 and expectations of another record South American crop in 2016.

"After declining to a record low 92m bushels at the end of the 2013-14 marketing year, ending stocks are expected to be at a nine-year high of 465m bushels at the end of the 2015-16 marketing year.

"Planted acreage of soybeans is expected to increase in 2016, but may fall short of early 2015 intentions due to prospects for low returns.

"A trend yield near 45.5 bushels per acre would result in a 2016 crop nearly 200m bushels smaller than the 2015 crop. Still, 2016-17 year ending stocks would likely remain above 450m bushels.

"Prices averaged $10.10 per bushel during the 2014-15 marketing year and are expected to average near $8.90 per bushel during the current year and near $8.90 per bushel during the 2016-17 marketing year."

Morgan Stanley

"Soybeans should underperform the grains complex in 2015-16, as US stocks-to-use build to nine-year highs and world stocks-to-use rise to a record for a second straight year.

"Favourable returns relative to other crops led to record US soybean planting intentions again in 2015. However, a decline in yields from last year's records should lower production year on year.

"Attractive planting economics have increased soybean acreage in Brazil and Argentina at the expense of corn - driving South American production to new records.

"Record South American supplies have spurred an acceleration in domestic crush and exports.

"China's import growth may slow in 2015-16, as livestock herd expansion moderates."


"Soybean prices are forecast to rise marginally through the first quarter of 2016, but will still remain in close proximity to the recently seen six-year lows. Array

Q1 2016: $8.95 per bushel

Q2 2016: $8.95 per bushel

Q3 2016: $9.10 per bushel

Q4 2016: $8.85 per bushel

Forecasts for quarter average, spot New York futures contract

"However, that does not mean that there will not be any volatile periods in 2016. Price risk, from both the supply and demand sides, could be an issue.

"The large 2015 US soybean crop and expectations of another record crop in South America in 2016 keep the global balance sheet well supplied.

"The Chicago futures forward curve is almost flat throughout the next three years, reflecting the market expectation of balanced supply and demand."


Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures gain, cotton prices jump on US data

Initial USDA forecasts for crop supply and demand for 2018-19 lift soy and cotton prices, but are not so well received in the cotton market

US soy exports to rebound to record top in 2018-19 - but corn, wheat volumes to fall

The USDA, in much-anticipated forecasts, sees a boost to soybean trade from Argentina’s woes. But corn, wheat exports face strong competition

Demand for US soybeans, soymeal tumbles, as prices soar

US export sales of soymeal hit a 2017-18 low, and those of soybeans turn negative. But in cotton, buyers step in as prices fall

World wheat output to fall this year - but not barley, corn, rapeseed harvests

But corn stocks, like wheat inventories, look like declining over 2018-19, the IGC says, in its first forecast for the grain
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069