Devaluation of US field stocks - moderate stock market reaction after the first price jumps
For the current price formation in the oilseed sector, the focus of observation is on the development of the possible harvest outcome for US soybeans. Soybeans are the market leader in the oilseed complex and the US harvest is the most important at the current stage of market development.
The weekly stock assessments of the US Department of Agriculture currently provide the decisive basis for price developments on the stock exchanges.
The persistently low rainfall in the relevant growing regions is leading to a continuous devaluation of stocks. After months of above-average crop development, the proportion of crops in good to excellent condition is now well below the 10-year average. The expected record harvest of well over 90 million tons will probably no longer be achieved. The latest estimates point to 88 million tons, after only 84 million tons were achieved in the disastrous summer of 2012.
Soybean prices have risen sharply again in recent weeks following the dramatic fall in July. The price jumps are remarkable, although it is always pointed out that last year's weather conditions were far worse, namely "hot and dry". This year, there is likely to be little rainfall, but temperatures are more than moderate at well below 30 degrees.
A second fear of early frosts is considered unlikely by meteorologists, at least until mid-September. By then, the soybean crops could be progressively maturing and less susceptible to frost.
The latest assessments have at least stabilized prices on the stock markets. Profit-taking was observed in some areas. The extent to which prices will now calm down further depends on further weather developments in the US Cornbelt.
