Soybean Prices Slide as U.S. Planting Season Approaches

US: U.S. Soybean traders have sold off Chicago-traded beans spectacularly this month as economic worries mount, and Brazil’s bumper harvest enters the market. Despite this, American farmers are yet to begin planting their next crop and domestic supplies are on track to reach nine-year lows by September.

On Wednesday, the most actively traded CBOT Soybean contract sunk to its lowest level since early December, ending at almost 6 percent lower than its highest point for the month. The new-crop November SX3 beans performed worse still, settling at $12.72-1/2 per bushel - more than 8% below their month’s high.

Soybeans have taken a tumble so far this month, posting their worst March since 2008. As the relative strength index dropped below 20 - typically an indication of oversold conditions - values had not been seen so low since the earlier days of the pandemic.

The causes for beans' dramatic decline may lie within its own market rather than external factors like banking sector turmoil, inflation or geopolitical conflicts. This week's drop in grains and oilseeds, particularly Soybeans, cannot be attributed solely to outside markets.

Crude oil futures have had a strong start to the week, with U.S. equities also gaining ground before the Federal Reserve's announcement of an expected interest rate hike late on Wednesday.

However, global vegetable oils and oilseeds have taken a beating this week, reaching multi-month and even multi-year lows. For example, European Rapeseed futures have dropped 19%, Canadian canola is down 12%, and Malaysian Palm Oil has lost more than 11% since March began.

Money managers are now holding their first net bearish position in CBOT Corn futures and options since August 2020, resulting from a record three-week sell-off. Despite this, they remain decently bullish in beans with a net long of 127,661 contracts as well as relatively few outright short positions.

Funds have taken their focus to selling Soybeans recently. Money managers made a huge move in the CBOT soy futures and options by selling off 61,400 contracts in November 2019, which was over double the weekly record for funds to be flat.The net selling in Corn last week of February was even bigger than the previous record, with over 147,000 contracts sold - much higher than the 104,000-prior high.

Despite the challenging crop situation in Argentina, Brazil's bumper harvest and continued exports have weighed on the Soybean market. However, the size of the 2023 U.S. Soybean crop is still unknown as farmers are yet to make planting plans.

The upcoming U.S. planting intentions report, set for next Friday, often surprises the market. According to statistics, it is likely that Soybean acres will come in lower than expected; this has been the case in seven out of the last 10 years.