4 Factors affecting soybean futures in August

What has happened

Harvest is still weeks away, but with soybean prices back down near price points unseen in nearly four years, many wonder what soybean prices will do in the weeks to come.

Will U.S. soybean production be large, with prices continuing to sour? Or with prices as low as they are, could the “harvest low” for soybean prices occur sooner than later? If the low is near, what would it take for a price rally? Is there any hope?

From a marketing perspective

Here are four key factors to monitor for soybean futures in August:

1. The first important is weather. August is a make-it-or-break-it month for final soybean production, as it’s the critical pod-filling window. Heading into August, the overall U.S. crop is doing quite well, based on weekly crop progress ratings. Should the weather become hot and dry, the market would likely find price support. At present, there is very little weather premium in soybean futures prices. 
   
2. The next watch list item is the August 12 USDA report. This is a regular monthly supply-and-demand report from the USDA, and its many aspects could be updated. On the supply side, trade will watch for any signs of yield change and harvested acreage updates. On the demand side, traders will monitor export and crush demand. The current U.S. ending stocks for the 2024–2025 crop year are pegged at 435 million bushels — a comfortable number. This is up from 345 million bushels for the 2023–2024 crop year, and up from 264 million bushels from the 2022–2023 crop year. The perception of large supplies tends to weigh on prices. 
3. The third item to monitor is the position of managed money fund traders. In late July they had amassed a record net short position, with well over 185,000 short contracts. Will they “sit” on those short positions? Will they extend their record short position, which likely would weigh on prices? Or will they begin to exit those positions and buy them back, providing a potential price lift for soybean futures? 
4. The last August item is the export demand for soybeans. Demand for the 2024–25 crop year has been off to a slow start. However, November futures are recently trading near $10.00. Global end users may start to step up the pace on purchases, just because prices are at four-year lows. In its most recent report, the USDA suggests that export demand for the 2024–25 crop year will be up to 1.825 billion bushels, thanks to lower prices. This is up from 1.7 billion bushels in the 2022–23 crop year. Will we see that demand surface? Keep in mind, should weather issue signs arise in August, that may help the notion of end users trying to scoop up cheap soybeans before prices add a weather premium. 

Prepare yourself

There could be soybean futures price volatility during August. Make sure you stay on top of things to help manage risk and capture potential pricing opportunities.

If you have questions, you can reach Naomi at naomi@totalfarmmarketing.com or visit totalfarmmarketing.com.

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