Soybean prices expected to stabilize in a downtrend

Brazil is expecting record-breaking soybean harvests due to favorable conditions, while the U.S. faces challenges in export inspections. Concerns over the potential end of the Black Sea grain deal have impacted soybean futures, while declining European Union soybean imports and drought conditions in the U.S. Midwest have added further complexities to the soybean market.

Brazil's agricultural agency, CONAB, has increased its projections for soybean production, which were already at record levels or a significant 24% increase from the previous year. This increase is attributed to favorable weather conditions and improved crop yields. The larger crops in Brazil are impacting the demand for U.S. beans in the export market.

On the other hand, the U.S. Department of Agriculture (USDA) has reported another generally bearish week for U.S. export inspections. Strong export competition for key commodities is driven by seasonal supply and demand trends, as well as the strength of the U.S. dollar compared to other major currencies.

In terms of soybean supply and use projections for the 2023/24 period in the United States, there are projections of higher beginning and ending stocks. The increase in beginning stocks reflects reduced exports for the 2022/23 period, resulting from lower-than-expected shipments in May and competition from South America. With increased supplies for 2023/24 and no changes in usage, the ending stocks for soybeans are projected to reach a 15 million bushel increase. The forecasted soybean price remains unchanged at $12.10 per bushel.

Looking at the global soybean outlook for 2023/24, there are higher beginning and ending stocks. The increase in beginning stocks for the United States and Brazil is partially offset by lower stocks for Argentina. The ending stocks for 2023/24 are projected to increase by 0.8 million tons to 123.3 million tons, with higher stocks for the United States, Brazil, and the EU, partially offset by lower stocks for Argentina and Vietnam.

U.S. soybean futures reached a one-month high due to concerns about dry conditions in the U.S. Midwest, which could adversely affect crop prospects. The strength of crude oil prices also influenced the rise in soybean prices. However, there was a subsequent decline in soybean futures as traders locked in profits after the previous session's rally.

There has also been a negative impact on soybean demand due to a decrease of 1.6 million tons in European Union soybean imports. Data published by the European Commission indicates that European Union soybean imports for the 2022/23 season represents a 12% decline by June 11, compared to the previous year's import volume.

In other news, the agricultural market has been influenced by discussions from Russian President Putin about potentially ending the Black Sea export deal. While soybeans would not be significantly affected, this situation could indirectly increase the demand for soybeans in countries impacted by such a decision. Furthermore, U.S. crude oil prices experienced a more than three percent increase, which has influenced soybeans as they are utilized in the production of biofuels.

Data for Technical Analysis (5H) 

CFD US Soybeans Futures - Jul 23 (ZSN3)

Resistance : 1394.35, 1396.85, 1400.91

Support : 1386.23, 1383.73, 1379.67                            

5H Outlook

Source: Investing.com                 

Buy/Long 1 If the support at the price range 1383.23 - 1386.23 is touched, but the support at 1386.23 cannot be broken, the TP may be set around 1395.58 and the SL around 1382.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1394.35 - 1397.35, TP may be set around 1403.00 and SL around 1385.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1394.35 - 1397.35 is touched, but the resistance 1394.35 cannot be broken, the TP may be set around 1384.96 and the SL around 1399.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1383.23 - 1386.23, TP may be set around 1376.00 and SL around 1397.00, or up to the risk appetite.       

Pivot Points Jun 15, 2023 02:52AM GMT

Sources: Reuters, Tastylive