Soybean Market Rebounds with Strong Export Sales

Soybeans have been experiencing a notable uptick in the market, with a 4% surge in price this month, building on the impressive 2.78% growth from the previous month. This resurgence marks a recovery from the lowest price point observed since December 2021. Soybean prices have been exhibiting mixed performance, with variations in nearby and deferred contracts, driven by factors such as export sales to China and uncertain weather conditions in South America.

Soybean meal prices also displayed mixed performance, while bean oil prices were firmer or moderately higher, driven by demand projections.

The United States Department of Agriculture (USDA) reported substantial new export sales to China and undisclosed destinations for 2023/24 delivery, totaling 1,145,500 tons. Out of this, 669,000 tons were directly purchased by China, while the remaining 464,500 tons were acquired by an unnamed buyer, which could potentially turn out to be China upon delivery.

In South America, weather conditions in Brazil are mixed, with some areas experiencing excessive moisture, while others are grappling with dry spells. Parts of Argentina have received improved rainfall, though it's early in the South American growing season. Analysts are generally optimistic about another record-breaking soybean crop in Brazil and a rebound in Argentina following last season's drought damage.

Brazilian soybean exports to China have exceeded the previous year's volumes, while China has significantly increased its soybean purchases from Brazil, diminishing the USA's role as a major supplier to the Chinese grain feed market.

China's soybean imports for the 2022-23 marketing year reached 100.86 million tonnes, largely due to strong demand. The demand for soybean meal in the swine and poultry sectors, as well as increased demand for vegetable oil in the food sector, contributed to the growth in imports. The FAS expects imports for 2023-24 to reach 100 million tonnes, reflecting China's efforts to diversify its soybean sources and stimulate domestic feed production.

China's efforts to support domestic soybean cultivation through policies have been instrumental in sustaining production. Soybean production is expected to reach 19.7 million tonnes in 2023-24, while domestic consumption is projected to increase to 118.2 million tonnes in the same period.

In the European Union, soybean imports for the 2023/24 season have reached 3.83 million metric tons by early November, slightly lower than the previous year. Similarly, rapeseed and palm oil imports have seen declines, while soymeal imports remained relatively stable.

In the futures market, traders responded to soybean price movement by making adjustments to their long and short positions in the market. Long positions decreased by 31,510 contracts to 103,628 contracts, marking the lowest level for long speculators since 2010. Short positions also decreased by 11,316 contracts, resulting in a total of 87,368. If soybean prices continue to rise, it could result in more short positions being covered. This, in turn, has the potential to drive prices even higher. However, there is still a risk from an increase in global supply amid stable or slightly increased demand, which may exert pressure on soybean prices during this period.

Data for Technical Analysis (5H) CFD US Soybeans Futures - Jan 24 (ZSF4)

Resistance : 1366.99, 1367.72, 1368.92

Support : 1364.59, 1363.86, 1362.66                     

5H Outlook

Source: Investing.com                                            

Buy/Long 1 If the support at the price range 1356.59 - 1364.59 is touched, but the support at 1364.59 cannot be broken, the TP may be set around 1367.83 and the SL around 1352.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1366.99 - 1374.99, TP may be set around 1377.5 and SL around 1360.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1366.99 - 1374.99 is touched, but the resistance 1366.99 cannot be broken, the TP may be set around 1364.59 and the SL around 1379.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1356.59 - 1364.59, TP may be set around 1350.00 and SL around 1371.00, or up to the risk appetite.       

Pivot Points Nov 9, 2023 03:10AM GMT