USDA will release the September supply and demand report at 0:00 on September 13th (Friday) Beijing time. In the August report from the United States Department of Agriculture (USDA), the soybean yield forecast is based on crop growth conditions. The USDA collects yield assessment data from farmers through email and phone surveys, without conducting on-site inspections. In contrast, the September USDA report will include yield data obtained through field surveys. Demand-side data is usually adjusted based on existing procurement and sales information or inventory information.

Focus

1. The soybean yield in the United States remains high, and the focus is on the extent of the increase!

As of the week ending September 8th, the U.S. soybean crop condition was 65%, higher than the market's expectation of 63%, the previous week was 65%, and the same period last year was 52%. The soybean pod setting rate was 97%, compared to 94% the previous week and 97% the same period last year, with a five-year average of 96%. The soybean leaf dropping rate was 25%, compared to 13% the previous week and 27% the same period last year, with a five-year average of 21%. Since the beginning of the year, the soybean crop condition in the United States has been high, and the market expects a bumper soybean harvest. The increase in soybean yield will significantly increase the market's supply expectations for soybean.

The Pro Farmer's August survey predicts that the U.S. soybean yield in 2024 will be 54.9 bushels per acre, higher than the USDA's August monthly report expectation of 53.2 bushels per acre, and higher than the crop survey's 49.7 bushels per acre in 2023. In the 14 forecasts from 2010 to 2023, Pro Farmer only overestimated the yield 4 times, while in most cases, it underestimated. Based on this historical trend, it is unlikely that the USDA will significantly lower the U.S. soybean yield forecast in the September report.

2. Soybean export sales in the United States are weak, but there are weather concerns!

Due to the expected bumper soybean crop in the United States, soybean export sales have been mediocre. Data shows that as of the week ending August 29th, net soybean sales for the 2023/24 marketing year decreased by 228,000 metric tons, reaching a yearly low and significantly lower than the previous week and the four-week average. Net sales for the 2024/25 marketing year were 1,658,700 metric tons, compared to 2,615,800 metric tons a week ago. This data is within market expectations. An analyst said that people speculate that the USDA September report will confirm high soybean yields, but whether the yield will be as high as stated in the report remains to be observed.

In addition, consulting firm AgRural said that due to low soil moisture and dry weather, soybean planting in Brazil has not yet started. StoneX company said that soybean planting in Brazil will be delayed until the region receives rainfall. Meteorological forecast models show that there will be no rainfall in September, and rainfall will not resume until October. The ongoing drought in most areas of the US Midwest may put pressure on late-planted soybeans, even though most of the soybean crops are nearing maturity.

3. Does the improvement in soybean crushing profit in the US have any impact on demand?

As of the week ending September 6, 2024, the profit from soybean crushing in the US was $2.88 per bushel, an increase of 3.4% from the previous week, and it has improved for three consecutive weeks. As a reference, the average crushing profit in 2023 was $3.29 per bushel. The truck quote for soybean oil in Illinois is $0.4319 per pound, equivalent to $5.10 per bushel; a week ago, it was $0.4397 per pound, equivalent to $5.19 per bushel. The spot price of 48% protein soybean meal at Illinois soybean processing plants is $353.43 per short ton, equivalent to $8.22 per bushel; a week ago, it was $344.00 per short ton, equivalent to $8.00 per bushel. The average price of No. 1 yellow soybeans during the same period was $10.44 per bushel, compared to $10.21 per bushel a week ago.

There is a close relationship between soybean crushing profit and soybean prices. The main products of soybean crushing are soybean oil and soybean meal. If crushing profit rises, it may increase the demand for soybeans, and vice versa.

Institutional Outlook: USDA September Supply and Demand Report

Zhongtai Futures: It is expected that the USDA Supply and Demand Report for September will have a neutral to slightly bullish impact on CBOT soybean futures prices.

It is expected that the USDA Supply and Demand Report for September may raise the new season's US soybean yield to around 53.5-54 bushels per acre. Although we believe that the data on US soybean yield is bearish, the relatively ample supply of US soybeans for bearish trading is expected to have insufficient bearish drive on CBOT soybean prices. Currently, the focus of the international soybean market is shifting to South America. Brazil is entering the planting season, and the dry and less rainy conditions in most parts of Brazil are not conducive to soybean planting. If the drought continues, it will affect the planting area and yield of soybeans in Brazil. It is expected that the USDA Supply and Demand Report for September may adjust the new season's soybean production in Brazil to 0.167-0.169 billion tons, which may have a slightly bullish impact. Overall, we expect that the USDA Supply and Demand Report for September will have a neutral to slightly bullish impact on CBOT soybean futures prices.

Zhongtai Futures: Paying attention to the USDA Supply and Demand Report for September, the weather before soybean planting in Brazil, and the pace of market trading rate cuts.

Soybeans are about to be harvested and still face pressure on the market. South America is about to sow, and the weather forecast shows that South America is dry. Managed funds continue to reduce their net short positions in soybeans. Soybeans are facing short-term fluctuations between bullish and bearish, and are expected to maintain a volatile trend. Domestic soybean meal has performed stronger than soybeans, driven by rapeseed meal and the anticipated decline in soybean arrivals in the fourth quarter. Market sentiment continues to improve, and soybean and soybean meal inventories have started to decline. However, crushing volumes remain relatively low recently, and domestic supply pressures are gradually easing but still exist. This week, the USDA September Monthly Supply and Demand Report will be released. Risk aversion remains the focus before the important report, and short-term attention will be on whether demand from importing countries for US soybeans will accelerate, the September USDA supply and demand report, the weather in Brazil before planting, and the pace of market trading interest rate cuts.

Shanghai Dalian Futures: Looking at the weather in Brazil, there are signs of drought.

In September, the harvest of soybeans in the United States will gradually begin, and market attention will gradually shift to South America. The probability of a La Niña event occurring is high in autumn and winter this year. Dry weather is likely to occur in South America, which will have a negative impact on soybean production. Looking at the current weather in Brazil, there are signs of drought. There is strong demand for US soybean exports and crushing, and recent reports continue to show large single sales of soybeans. As of the week ending August 29, US soybean net export sales were 1.4307 million tons, in line with expectations. Pay attention to the release of USDA September supply and demand report this week.

Reuters and Bloomberg Outlook

Outlook: Global 2024/25 year-end stock estimates for soybeans, corn, and wheat

Global soybean ending stocks for the 2024/25 year, estimated by Bloomberg and Reuters, have been revised downward to 0.134 billion tons and 0.13386 billion tons, respectively, while USDA's August estimate was 0.1343 billion tons.

Outlook: US 2024/25 year-end stock estimates for soybeans, corn, and wheat

US soybean ending stocks for the 2024/25 year, as forecasted by Bloomberg and Reuters, have been raised to 0.568 billion bushels and 0.565 billion bushels, respectively, while USDA's August estimate was 0.56 billion bushels.

Forward-looking data: Estimated soybean production and yield in the United States for 2024/25.

Estimated soybean production in the United States for 2024/25: Bloomberg forecasted an upward revision, while Reuters forecasted no change, at 4.596 billion bushels and 4.589 billion bushels, respectively. The previous estimate in August was 4.589 billion bushels.

Estimated soybean yield in the United States for 2024/25: Bloomberg forecasted a slight upward revision, while Reuters forecasted no change, at 5.33 billion bushels and 53.2 billion bushels, respectively. The USDA's August estimate was 53.2 bushels per acre.