Soybean prices expected to be pressured this year

Recent soybean futures are falling dramatically due to fund and technical sell-offs, including pressure ahead of the US Federal Reserve's interest rate announcement and crude oil prices that fell the day before. As farmers monitor crop weather in the United States, the USDA reports that soybeans are now planted at a rate of 19%, up from 9% last week and the five-year average of 11%, and above the 17% forecast.

The USDA's soybean export inspection for the week ending April 27 revealed export volumes exceeding forecasts for the current marketing year, at 401,976 tons, 24,248 tons higher than the previous week but 204,130 tons less than the previous year. China and Germany are the most preferred export destinations. And, through the current marketing year, the total inspection volume of soybeans was 47,451,915 tons, up from 47,252,722 tons the previous year, while Brazil continues to dominate the soybean export market.

The USDA's soybean supply and consumption predictions for 2022/23 remained unchanged from the previous month. Soybeans and soybean meal prices were unchanged. Soybean oil prices were expected to fall 2 cents to 64.0 cents per pound.

Meanwhile, forecasts for global soybean demand and supply for 2022/23 show lower output and exports. Global soybean output declined by 5.5 million tons to 369.6 million tons, with lower output in Argentina and Uruguay somewhat offset by stronger output in Brazil.

Due to hot and dry weather until March, Argentina's soybean yield declined by 6.0 million tons to 27.0 million tons. In addition, due to fewer harvested lands, Uruguay's output fell 0.9 million tons to 1.2 million tons. Brazilian output increased by 1.0 million tons to 154.0 million tons.

On Wednesday, July soybean futures closed a combined 5% lower for six straight sessions, the lowest trading contract since late October last year. As a result, recent soybean prices have fallen to levels comparable to the March slump. Meanwhile, near-term contract prices remained higher than the March 24 lows.

This is due to high soybean output in Brazil, which is forecast to produce 153 million tons and total exports of 92.7 million tons, including a longer export period due to torrential rains in Brazil pushing soybean yields to record highs in the second half of the year. From February to June, Brazil regularly sells and exports soybeans, which might overlap with the current US soybean export season, which runs from September to February and is anticipated to produce 116.4 million tons of soybeans this year, potentially putting the two countries in a battle for soybean market dominance.

However, China remains the key variable for soybeans, as it is one of the world's largest soybean importers and Brazil's largest commodity importer. Soybeans were Brazil's main export in 2022, accounting for 70% of China's purchases. While China's soybean imports from Brazil have nearly doubled in the last decade, the majority of them are used as ingredients in the production of protein for animal feed. Previously, some livestock businesses that could not afford the cost of soybeans for animal feed turned to other options, such as corn and wheat. As a result of this, soybean prices may remain under pressure until the end of the year.

Data for Technical Analysis (5H) 

Resistance : 1419.81, 1421.11, 1423.21

Support : 1415.61, 1414.31, 1412.21    

5H Outlook

Source: Investing.com              

Buy/Long 1 If the support at the price range 1414.10 - 1415.61 is touched, but the support at 1415.61 cannot be broken, the TP may be set around 1420.42 and the SL around 1413.60, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1419.81 - 1420.30, TP may be set around 1424.00 and SL around 1415.10, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1419.81 - 1420.30 is touched, but the resistance 1419.81 cannot be broken, the TP may be set around 1414.92 and the SL around 1420.80, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1414.10 - 1415.61, TP may be set around 1411.00 and SL around 1420.30, or up to the risk appetite.       

Pivot Points May 04, 2023 03:45AM GMT

Sources: Brownfield Ag News, Successful Farming