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Strategists at OCBC Bank think soybean prices may have peaked and could begin retracing back towards $12/bu. The stock-to-use of the US and Brazil, however, remains tight and they do not expect prices to decline below $10/bu.

US soybean exports look suspect and likely to disappoint

“We estimate that full-year 2021/22 US soybean exports will be in a broad range of 1.5bn bushels to 2.1bn bushels. USDA’s current estimate of 2.08bn bu, however, is right at the top end of this range and we see scope for further downward revision, possibly to 1.9bn bu. Given adequate stock levels of soymeal and soybeans in China at present, the slowing pace of bean purchases is a growing possibility.”

“We expect 2021/22 prices to remain above $10/bu, but a new record high is unlikely in our opinion. The higher ending stock situation puts us on a bearish slant towards new crop soybeans, and we see delivery on the Mar’22 contract to end the year at $12/bu.”

“On a US and Brazil combined basis, the base case is for total ending stocks to exceed 1bn bu, although it will still be materially lower than the 5Y average of 1.5bn bu primarily due to US stock tightness. With rising prospects of an easing stock to use ratio on the US + Brazil combined basis, we do not expect 2021/22 crop prices to reach the heights of the previous season.”