China's Dominance Impacts Soybean Prices Amidst Lower Supply and Geopolitical Tensions

Soybean prices were slightly lower due to profit taking and technical selling. The USDA's national good-to-excellent rating for soybeans decreased by 1% due to mixed weather conditions in key U.S. growing areas. While August forecasts showed some relief from threats, the USDA may lower its yield projection on the next supply and demand report due to persistent drought conditions. Despite the sale of U.S. soybeans to China, Brazil continues to dominate the Chinese market due to competitive pricing and a closer trade relationship.

The market remained sensitive to fluctuations in the Chinese market due to China's dominance as the world's largest soybean importer. China aims to achieve food security and has been increasing domestic soybean production. Despite efforts to boost production, China faces challenges, including extreme weather events and competing demand for corn. Rabobank predicts a decline in China's soybean imports, but it will likely remain the world's largest soybean importer, influencing soybean prices.

China's increasing dominance in the soybean market has raised concerns among U.S. farmers. The US-China trade war, which began in 2018, contributed to Brazil's growing share in the Chinese market, posing challenges to the US soybean industry, while the US remains heavily reliant on the Chinese market.

US soybean production is forecasted to be lower due to a decrease in harvested area. Soybean exports are expected to decrease due to lower U.S. supplies and lower imports for China and other countries.  Global soybean trade and ending stocks are also projected to decrease. China's soybean imports are expected to decline due to higher carry-in supplies and lower global imports.

The global soybean market has been affected by lower supply, strong demand, and geopolitical tensions. The conflict in Ukraine and its impact on grain prices have been monitored closely. The ongoing dynamics between the U.S., China, and other countries play a crucial role in shaping the soybean market's direction.

Soybean futures declined due to forecasts of much-needed rains following hot and dry weather conditions, alleviating concerns over crop output. The International Monetary Fund estimated that Russia's exit from a deal allowing Ukrainian exports via the Black Sea could raise global grain prices by 10-15%. Price volatility in soybeans is likely to persist due to uncontrollable factors affecting supply and high demand. While money managers increased their net long positions in CBOT soybean futures and options. Traders are closely monitoring U.S. soybean export sales, which may influence market direction, along with unfolding weather forecasts for August.

Data for Technical Analysis (1H) CFD US Soybeans Futures - Nov 23 (ZSX3)

Resistance : 1426.58, 1428.79, 1432.37

Support : 1419.42, 1417.21, 1413.63                    

1H Outlook                  

Source: Investing.com       

Buy/Long 1 If the support at the price range 1414.42 - 1419.42 is touched, but the support at 1419.42 cannot be broken, the TP may be set around 1429.25 and the SL around 1410.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1426.58 - 1431.58, TP may be set around 1438.00 and SL around 1415.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1426.58 - 1431.58 is touched, but the resistance 1426.58 cannot be broken, the TP may be set around 1419.42 and the SL around 1435.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1414.42 - 1419.42, TP may be set around 1411.00 and SL around 1430.00, or up to the risk appetite.       

Pivot Points Jul 27, 2023 01:22AM GMT

Sources: Brownfield Ag News, Business Recorder