Soybean ETFs Continue To Rally After Surprise USDA Report

Following a banner day for U.S. soybean futures, which rocketed about 6% higher on Friday after the U.S. Department of Agriculture (USDA) reported a significantly lower-than-expected 2023 soy plantings and June 1 inventories, the commodity continues to climb on Monday, lifting agriculture-related ETFs as well.

On the Chicago Board of Trade, November soybeans closed 77-1/2 cents higher on Friday to reach $13.43-1/4 per bushel. However, as of 130PM EST Monday, prices have climbed more than 1% again, notching nearly $13.58 a bushel.

Soybean futures surged after the USDA noted that U.S. farmers planted 83.5 million acres of the commodity, or 4 million acres lower than the government’s March prognostication, which was below the lowest level of several analyst estimates. The reduced acreage suggests a decline in soybean crops will be harvested.

“For beans, if the yield falls to 50 (bushels per acre) instead of the expected 52, then that’s really tight,” said Craig Turner, commodities trader at Daniels Trading.

A Notable Soybean Change

Arlan Suderman, chief commodities economist for StoneX, added: “The margin for error for soybeans just went to zero.”

The USDA reported U.S. soybean stockpiles as of June 1 at 796 million bushels. That’s down 18% from a year ago and below most trade estimates.

The more conservative soybean projections spurred several CBOT soybean futures contracts to hit their daily 4-cent limit. This often results in the exchange increasing its daily trading limits for soybean, soymeal, and soy oil futures. That was the case during Monday’s trading session.

“It’s a game changer regarding the soybean balance sheets,” says Joe Vaclavik of Standard Grain. “What it means is it gives you very little room for error, given this lower acreage number. And on the flip side, we saw a higher corn acreage number that went up to 94.1 from 92, even in March. So it was a big divergence in the markets sell off in corn on a higher acreage number and a sharp rally in soybeans on a drastically lower acreage number.”

Agricultural ETFs Can Help Savvy Investors Diversify Assets

For savvy investors looking to trade soybean futures using ETFs, the Teucrium Soybean Fund (SOYB) is one option.

Teucrium is one of several resource-specific commodity ETPs available to investors, offering exposure to the commodity of soybeans. It is riskier than some other ETFs, and given the ETF’s targeted focus on a single natural resource, SOYB is probably more useful for more sophisticated, shorter-term investors looking to make a tactical play on this segment of the agricultural commodities market.

Teucrium has several other agricultural ETFs as well, including the Teucrium Sugar Fund(CANE), Teucrium Corn Fund(CORN), and Teucrium Agricultural Fund(TAGS), which offers exposure to four major agricultural commodities, including corn, sugar, soybeans, and wheat.

For more news, information, and strategy, visit the Commodities Channel.