Soybean prices are actively recovering after falling to a multi-month low

The fall in soybean prices accelerated last week, with traders expecting further declines. However, markets turned sharply higher on Friday, and in three sessions soybean futures rose 3.2% to last week's level of $533/t (-2% for the month, +3.1% for the year).

The rebound was driven by increased buying by traders after last week's sell-off, as well as forecasts of lower US soybean inventories due to buoyant exports, although the harvest in Brazil is weighing on prices.

According to the USDA, soybean exports from the USA for the week of March 17-23 increased by 23% to 888.7 thousand tons, which is 41% higher than the same figure last year. A total of 44.95 million tonnes of soybeans were exported for the season, up 3.4% from last year's pace, although analysts had expected importers to favor Brazilian soybeans. However, delays in harvesting and logistical problems are slowing down exports from Brazil.

According to Patria Agronegocios, soybeans in Brazil are harvested on 71% of the area compared to 77% last year.

Ahead of the release of the new USDA report, analysts released their own forecasts. According to them, soybean reserves will amount to 47 million tons (52 million tons last year). Prospective Plantings experts estimated the planting area in the US in 2023 at 88.3 million acres, which exceeds the Outlook Forum's February forecast of 87.5 million acres and last year's 87.5 million acres.

Price pressure from the Brazilian soybean crop is intensifying in both the domestic and export markets, especially given logistical challenges. Large crop arrivals amid loading delays have led to queues of up to 32 days, and many buyers are not accepting soybean offers due to a lack of storage space. Due to this, the premium for May CME futures decreased to minus $27.5/t, although it is usually +25..+35 $/t. In March, Brazilian soybean prices fell by $50-57/t to $495-500/t FOB Paragna.

Brazil exported 9.9 million tons of soybeans in March, but is unlikely to ship the projected 15 million tons due to logistical difficulties. Amid congestion at major ports, shipments of soybeans to Argentina increased, particularly from the free ports of the drought-stricken southern states of Rio Grande do Sul and Mato Grosso do Sul. Soybeans from the central states are trucked up to 2,000 km to clear warehouses. Exports from Brazil to Argentina will soon accelerate as Argentina's soybean harvest is set to fall 44% year-over-year from 44 million tons to 25 million tons, according to the Buenos Aires Grain Exchange, leaving processing plants idle.

Decline in domestic soybean prices in Argentina and Brazil will not yet affect global prices as logistics problems increase demand for soybeans from the US and Brazilian farmers will soon reduce sales due to a sharp drop in prices.