Soybean Slide Spurs Corn Confidence in U.S. Farming Circles

In the fiscal year 2023/24, the U.S. soybean export market is facing a challenging scenario, sparking concerns within the agricultural sector. Concurrently, there is a more optimistic outlook for U.S. corn exports, indicating a potential upswing in competitiveness.

Data from the U.S. Department of Agriculture disclosed a worrisome 28% decline in net soybean sales for the week ending January 18, compared to the previous week. This decline, coupled with the increased likelihood of rainfall in South America, has contributed to a significant drop in soybean prices, reaching a two-year low.

Analyzing the market dynamics, Matt Bennett, an analyst at the American Agricultural Market Network, highlighted the uncompetitive Free On Board (FOB) price of U.S. Gulf soybeans compared to supplies from Brazil and Argentina. This lack of competitiveness has led experts to suggest that U.S. soybeans have essentially withdrawn from the market. With the South American soybean harvest approaching, Brazilian soybean sales and shipments are anticipated to reach a peak season. Adding complexity, the recent upward trend in the U.S. dollar has pushed U.S. soybean prices $30 to $40 per ton higher than their South American counterparts.

Contrastingly, in the corn sector, Krista Swanson, Chief Economist of the National Corn Growers Association (NCGA), paints a different picture. Total U.S. corn export sales for the fiscal year 2023/24 have remained steady compared to the previous five years, excluding last year's data. Challenges faced by U.S. corn exports in the previous summer, stemming from elevated prices in the U.S. Gulf and abundant, competitively priced corn from Brazil, have evolved positively. Recent months have seen U.S. corn prices align more closely with global competitors, resulting in increased export sales and bringing total sales to more comfortable levels. If this momentum persists, U.S. corn exports could meet the USDA's target of approximately 2.1 billion bushels. Despite these positive indications, challenges remain, including heightened competition from Brazil.

Delving into the complexities of the soybean market, the notable decrease in net soybean sales prompts industry-wide reflection. The 28% reduction in sales for the week ending January 18 underscores the current challenges faced by U.S. soybeans. The dwindling competitiveness of U.S. Gulf soybeans, especially compared to major producers like Brazil and Argentina, has led experts to assert that U.S. soybeans are effectively out of the market.

The recent strengthening of the U.S. dollar adds another layer of complexity to soybean market dynamics. With the U.S. dollar trending higher, U.S. soybean prices have been pushed $30 to $40 per ton higher than their South American counterparts, making them less appealing to international buyers. The combination of factors—diminished competitiveness, an impending South American harvest, and currency fluctuations—contributes to the challenging environment faced by U.S. soybean exports.