Slipping supplies and doubts about how they will be replenished prompted soybean futures to advance in value during the midweek trading session, according to Bloomberg.
Regions of the U.S. Midwest are likely to endure heavy rain, which will cut down on planting capacities while stockpiles are dropping. The inclement weather also comes as prices of palm oil shoot higher.
With less than one week remaining in June, the legume is pushing toward marking its second consecutive month of losses. Bloomberg-polled economists and analysts forecast said reserves of soybeans in the U.S. early this month likely amounted to 382 million bushels, which would mark the lowest supplies for June 1 in 37 years.
"We certainly are seeing a little bit of support added to the market from the tightness that we're seeing in soybeans," analyst Graydon Chong with Rabobank International in Sydney told the news outlet on Wednesday. "In the longer term, we're quite bearish on soybeans given that we're looking at having a historically large crop."
USDA to release data early next week
While the U.S. Department of Agriculture is slated to release reserve estimates early next week, Societe Generale SA projected supplies check in at 351 million bushels. The investment house also said it anticipates the legume will demonstrate a soft bounce in response to old crop numbers.
Regarding planting in the U.S., Bloomberg reports as many as 82.21 million acres will carry the legume this season. That represents an increase as compared with figures released by the federal agency at the end of the first quarter of this year, which amounted to 81.49.
Oil World, a German researcher, said this year's production of soybeans is forecast to register at 98.5 million ounces after having amounted to 90.5 million metric tons last year.
The figures released by the Agriculture Department hold consideration for the inclement weather.
As many as 2 million acres that are used for growing both soybeans and corn will be compromised because of conditions like flooding, ponding and hail, states a Wednesday report authored by president Michael Cordonnier with Soybean & Corn Advisor Inc., according to Bloomberg.
"It is likely that the eventual harvested acreage for both corn and soybeans will end up lower than what will be reported in the June planted report," according to the president. "The impact of the flooding may be more important for the soybeans."
Soybeans as critical ag commodity
The legume is considered a key commodity as far as agricultural production is concerned, Corn and Soybean Digest reports.
When soybeans perform strongly, so does the market for the other agricultural produce. The legume has been a spot-on bet during the past several weeks but traders now have reason to be more cautious.
Supplies are tighter in the U.S. and exports of the legume out of South America are slower than anticipated.
The soybean crop appears to have grown stronger in the U.S. during the past week, according to Corn and Soybean Digest.
U.S. states where production has strengthened during the past week include Texas, Oklahoma, Kansas, Nebraska, Missouri, Arkansas, Louisiana, Mississippi, Tennessee, North Carolina, Kentucky, Illinois, Indiana, Wisconsin and Michigan.
By contrast, the states where production has dropped during the past week are Ohio, Iowa, Minnesota, Alabama, and North and South Dakota.
Two USDA reports set for release
The Agriculture Department is set to release two reports next Monday – U.S. soybean stock estimates and forecasts for planted and harvested acreage.
According to Agriculture.com, the acreage forecast typically holds price implications while the stock estimate might very well end up serve as a surprise.
The release also will hold information from the first quarter, which serves as comparable information from prior quarters and projections for future ones.
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