Is the Global Soybean Balance Sheet Tight?

Core Viewpoint - The article argues that the perception of a tight global soybean supply is misleading, emphasizing that actual market data indicates a surplus rather than a shortage of soybeans in the US and globally [4][6][11]. Market Analysis - The National Soybean Index at the end of September was $9.2034, the lowest since August 2020, indicating that US supplies were at their largest relative to demand in over five years [6]. - The national average basis was 81.0 cents under November futures at the end of September, significantly lower than the previous 5-year low of 65.75 cents under November, suggesting weak immediate demand [7]. - By early October, the national average basis improved to 75.0 cents under November, influenced by seasonal factors as the November futures contract approached delivery [8]. Futures Market Insights - The November-January futures spread remained stable, covering 65% of the calculated full commercial carry, indicating no significant tightening in global supply and demand [10]. - The January-March spread, which reflects the last hope for demand to catch up with supplies, closed at 59%, down from 61% at the end of September, further suggesting a lack of tight supply conditions [12]. Global Supply and Demand Perspective - The article challenges the notion that global soybean supplies are tightening, stating that if they were, the commercial market would be pushing nearby futures contracts higher to secure supplies [9][10]. - Confidence in increased supplies from South America is growing, as indicated by the March-May spread covering 52% at the close, up from 42% at the end of August [12].