Soybeans fall as Brazil drought concerns ease, US dollar firms

Soybean futures declined on Thursday due to a stronger U.S. dollar and diminishing concerns about Brazil’s dry weather affecting soy planting. Additionally, the ongoing U.S. harvest contributed to a surplus in the market.

Wheat futures retreated further from three-month highs as robust Black Sea exports offset Europe’s poor production. Corn futures also decreased as the U.S. harvest accelerated.

The most-active soybean contract on the Chicago Board of Trade (CBOT) decreased by 0.6% to $10.08 a bushel. CBOT corn fell by 0.6% to $4.10-1/4 a bushel, and wheat slipped by 0.7% to $5.71-1/2 a bushel.

All three contracts reached four-year lows in July or August amidst ample supply. They have since benefited from a weaker dollar, which made U.S. farm goods more affordable for foreign buyers. However, prices remain close to their lows, and the greenback strengthened significantly on Thursday.

“Soybeans are still oversupplied globally,” stated Ole Houe of IKON Commodities in Sydney. “We have 35 million tons more soybean production this year than last year, and stocks are up.”

With the U.S. soy and corn harvests progressing rapidly and expected to be exceptionally large, soybean futures are likely to decline toward last month’s low of $9.55 a bushel, according to Houe.

Analysts and traders believe that drought in Brazil, the world’s largest soy producer, won’t become a major concern unless it extends into October. Brazil’s crop agency, Conab, continues to forecast a larger crop than last season’s.

Numerous weather forecasters anticipate the development of a La Niña weather pattern soon, which could typically lead to drier conditions in South America. However, Australia’s weather bureau indicated that if a La Niña event occurs in the coming months, it will likely be weak and short-lived.

The shorter and weaker La Niña forecast mitigates some of the bullish concerns for soybeans, including potential impacts on soybean oil prices. StoneX analyst Bevan Everett noted that planting is so early that a slight delay won’t significantly impact acreage losses.

In the wheat market, FranceAgriMer reduced its forecast for French exports due to a poor crop and reported that the protein content of French grain would be well below long-term averages.