Soybean Market Dynamics: Weather Worries and Record Chinese Output

In the soybean market, recent trading has been characterized by a mix of gains and losses, with a generally firm trend. The market experienced fluctuations, consolidating after earlier gains in the week. Traders closely monitored short-term rainfall forecasts for key soybean-producing regions in Argentina and Brazil. South American crops are currently in critical developmental phases, heightening the importance of weather conditions. The USDA's upcoming supply and demand estimates, along with CONAB's updated outlook for Brazil, are eagerly anticipated on February 8th.

Brazil's soybean harvest is just over 5% complete, and early reports indicate generally disappointing yields. Soybean meal prices rose, while bean oil prices declined, leading to adjustments in spreads. China reported record domestic soybean production in 2023, reaching 20.8 million tons, primarily driven by an expansion in planted areas.

In the United States, oilseed production for 2023/24 is estimated at 122.4 million tons, with soybean production projected at 4.2 billion bushels. Soybean supplies increased due to higher production, resulting in a season-average soybean price projection of $12.75 per bushel for 2023/24.

Global soybean production for 2023/24 is raised to 399.0 million tons, with varying forecasts for different countries. Argentina and Paraguay experienced improved yield prospects due to early-season rainfall, while Brazil's production is reduced due to reduced rainfall affecting yield potential.

As U.S. farmers prepare for the 2024 planting season, there is speculation about the acreage allocated to corn and soybeans. Factors influencing soybean acres include the opening of new soybean facilities and the profitability challenges associated with corn production.

China's Ministry of Agriculture and Rural Affairs (MARA) reported record-high soybean output in 2023, reaching 20.84 million tons. Despite efforts to increase domestic production, China's soybean imports increased by 11.4%, driven by demand for animal feed manufacturing. MARA's measures to reduce soybean imports include exploring alternative feed proteins and gradually reducing soybean inclusion in feed formulations.

The U.S. Soybean Export Council predicts that China will import 30 million metric tons of soybeans from the U.S. in the 2024 marketing year. China's overall demand for soybeans is expected to drive growth in U.S. soybean trade.

Soybean futures on the Chicago Board of Trade experienced mixed trading, influenced by uncertainties in South American crop prospects and profit-taking after hitting recent highs. Weather conditions in Argentina and Brazil, coupled with expectations of record South American supplies, contributed to market fluctuations.

The soybean price successfully surpassed the target at 1239.40, closing above it and indicating potential for further bullish correction towards 1261.20. Failure to consolidate above 1239.40 may lead to a decline. The expected trading range for this period ranges from 1225.00 support to 1260.00 resistance.

Data for Technical Analysis (5H) CFD US Soybeans Futures - Mar 24 (ZSH4)

Resistance : 1244.2, 1245.38, 1247.29

Support : 1240.38, 1239.2, 1237.29                                        

5H Outlook

Source: Investing.com                          

Buy/Long 1 If the support at the price range 1235.38 - 1240.38 is touched, but the support at 1240.38 cannot be broken, the TP may be set around 1245.46 and the SL around 1233.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1244.2 - 1249.2, TP may be set around 1255.00 and SL around 1238.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1244.2 - 1249.2 is touched, but the resistance 1244.2 cannot be broken, the TP may be set around 1240.38 and the SL around 1246.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1235.38 - 1240.38, TP may be set around 1228.00 and SL around 1249.00, or up to the risk appetite.       

Pivot Points Jan 25, 2024 02:09AM GMT