CBOT Soy Futures Rally as US Export Commitments Build at Record Pace

Front-month soybean futures on the Chicago Board of Trade (CBOT) are trading at their highest levels in five years, as US export commitments, mainly to China, soar to unprecedented levels. 

Click here to view US Soybean Total Commitments

Just 11 weeks into the 2020/21 marketing year, US soybean total export commitments stand at 51.3 million tonnes (1.884 billion bushels). That represents 85.6% of the USDA’s total soybean export projection for the full year, and the highest percentage ever achieved this early in the marketing period. The previous high was in 2016, when 72.3% of the USDA's full-year projection for soybean exports was committed at such an early date. 

Some 55% of the US export commitments are for China, with an additional 20% earmarked for “unknown,” which is assumed to also be China. 

The fast pace of building export commitments suggests the USDA is underestimating global demand for US soybeans, and that US ending stocks could decline even further from the 5.17 million tonnes (190 million bushels) recently projected by the USDA. 

Expectations of strengthening soybean demand are pushing January 2021 soybean futures on the CBOT to continue to post new contract highs, with the front-month contract nearing 1,200 cents/bushel, values not seen since 2014. Worries about tight supplies also are supporting prices, as dry conditions due to the current La Niña weather event threatens to severely compromise yields in both Argentina and parts of Brazil. Until South American production becomes more certain, it is difficult to envision a scenario where soybean prices retreat significantly. Gro users can monitor weather patterns in South America as the season progresses, and its impact on corn and soybean yields.

China’s demand for US soybeans continues to be reflected in futures prices on China’s Dalian Commodity Exchange (DCE). The DCE’s front-month No. 2 soybean contract, which reflects demand for imports, has spent recent weeks around three-year highs. Meanwhile, the No. 1 contract, which reflects domestic, food-grade soybeans, is trading at the highest level since 2008. 

Click here to view Dalian Soybean Futures - January 2021 contracts

Although there have been no new “flash” sales of soybeans to China in the past week, which are daily sales of over 100,000 tonnes, China has still been a buyer of smaller cargoes, as seen via the last export sales report.

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