Here is some further information explaining the behavior of Soybean oil prices, that seem to be acting contradictory to yesterday's USDA report. In summary the crop size was reduced from last month's forecast resulting in a smaller than expected end of year surplus. Also the concern I mentioned last month of this being a late developing crop due to weather.
"As of August 9, 66 percent of the soybean crop was rated in good-to-excellent condition. So far,
weather stress on the soybean crop has been low, but late planting and below-average
temperatures this summer have slowed crop development. A large swath of States in the
Midwest, extending from Iowa to Pennsylvania, had the coolest July in 115 years. For the
Midwest, the index of growing degree days (a measure of the heat available since April 1 to
grow crops) currently falls into the lowest quartile of all recorded values. Thus, blooming for the
soybean crop lags several weeks behind the usual pace. Likewise, pod formation has occurred
on only 55 percent of the soybean acreage, down from the 5-year average of 72 percent.
Delayed maturity for the soybean crop raises the probability that even a normal date for first frost
could curtail yields in northern regions. Such an outcome is not a foregone conclusion, however,
as maturity could be made up by an extension of warm temperatures into late September.
USDA’s first objective yield survey (which counts plants and measures plant characteristics on
randomly sampled farm plots) of 2009 forecast the national average soybean yield at 41.7
bushels per acre. While above last year’s yield of 39.6 bushels per acre, data on the crop’s
development as of early August held the forecast below the trend yield used last month (42.6
For more information you can go to http://usda.mannlib.cornell.edu/usda/current/OCS/OCS-08-13-2009.pdf