Increased prices for soybeans and its by-products in CBOT, due to potential loss of yields in the US and strong US export sales, raised the local price for the oilseed that gave way to significant traded volume. The better prices, both for export and for industry, had an overwhelming impact in stock purchases.
Between Friday and Thursday, CBOT soybean futures rose from USD 10 to USD 19 per ton depending on the position. After a USD 1 to USD 1.5 drop in Monday's session, CBOT November soybeans began to climb until reaching USD 377.4 per ton by Tuesday, with a USD 5.3 increase within the day. Although values are still different from those reached in July 10, 11 and 12, there is certainty in the market that there will be cuts in yields, although no one can point how large that adjustment will be. There are contradictory predictions about the climate conditions for crops, with those predicting high probabilities of low temperatures and rising humidity having changed their forecasts in recent times.
Looking into local activity, farmer selling reappeared once soybean prices exceeded ARS 4,000 per ton. On Thursday, bids in Rosario Board of Trade had reached $ 4,200, but buyers where paying up to ARS 4,300 per ton depending on volume. Higher prices boosted farmer sales while the increasing prices on export markets improved margins for exporting by-products and unprocessed soybeans, inciting buyers to raise the pace of trading.
In the last few weeks, we could observe a strong growth in purchases both from exporters and from industrial processors. Before May, traded volume was significantly behind other marketing years. Over the last two months, a significant part of those purchases received price fixings from sellers, resulting in total tonnage with pending price settlement falling to levels similar to those of previous years.
Throughout May, 2 million tons of soybeans that buyers already had in their silos received price settlements. During June, total price fixations informed by the Ministry of Agroindustry were of 1.8 million tons from both the industrial sector and the grains elevators. For the current month, only the industrial sector received price settlements for little more than 1 million tons.
Until today, still 1.3 million tons remain in possession of the export sector without a fixed price, whereas for the last season all the stock in hands of this sector had already been determined. Another thing to point out is that by this time of the 2015/16 marketing year, the export sector had already acquired all the soybeans it needed to fulfill its shipping commitments (approximately 9 million according to INDEC data). Today this value stands at around 7.9 million tons. Looking at the grand total for both sectors, only 50% of the total estimated soybean crop is acquired, just 5 percentage point below the number for the same height of the past MY. What distinguishes the current MY, as was stated before, is the high percentage of purchases which still have pending price settlements. As of the latest data, it stands at 58%, whereas by the same date of last year it only amounted to 49%.
As of July 20, soybeans export sales surpassed 5.8 million tons. By July 20, 2016, export sales of 2015/16 soybeans rose to 7.78 million tons. These values register very similar bought stock to export sales ratios. Last year, 79% (7.79 Mt / 9.9 Mt bought) of purchases were already committed to export whilst 74% (5.83 Mt / 7.9 Mt purchased) of 2016/17 soybean purchases are committed to export.
On the other hand, exports of by-products are performing well. Gross export volume for the oilseed complex (adding soy oil, soy meal, soy methyl ester and soybeans), is the second largest ever, only behind that of 2016. Crushing activity has a good profit margin, as was expected considering the drop in prices due to the harvest time.