Soybean Prices Slightly Rise; Outlook Remains Bearish

Soybean prices saw a modest increase due to short covering and technical buying, aided by the rise in meal prices driven by solid domestic crush demand. However, export demand for U.S. meal slowed down as Argentina, the leading exporter of soybean products, is expected to produce a larger crop this year. Soybean oil prices were mixed due to adjustments in spreads, while the trade closely monitored harvest activity in Argentina and Brazil. ANEC forecasts Brazil's April 2024 soybean exports to be higher than previously estimated.

The outlook for U.S. soybean supply and use in 2023/24 includes lower imports, residual, and exports, leading to higher ending stocks. The reduction in soybean trade reflects current pace and future shipment expectations. Consequently, soybean ending stocks are raised, and the season-average soybean price is forecasted to decrease. Global soybean supply and demand forecasts also show lower production, exports, and crush, with nearly unchanged ending stocks. Factors such as drought conditions in South Africa affected production, while production in Paraguay increased. Global soybean exports decreased mainly due to lower exports from the United States and South Africa.

The latest World Agricultural Supply and Demand Estimates from the USDA indicate that soybean demand lags behind. However, soybean use was reduced in the April report, possibly underestimating demand for biodiesel production and responding to decreased U.S. export demand compared to cheaper Brazilian soybeans.

The significance of Brazil's soybean production is a subject of ongoing debate, especially regarding discrepancies between estimates from Conab and the USDA. The recent divergence between their estimates raises questions about the accuracy of future projections, despite advancements in technology.

Paraguay's diplomatic relations with Taiwan and China impact its trade dynamics, particularly in soybean exports. While maintaining diplomatic ties with Taiwan, Paraguay seeks to strengthen trade with China. However, direct soybean exports from Paraguay to China are minimal, with most exports passing through ports in neighboring countries. State-owned enterprises like COFCO play a significant role in Paraguay's soybean production and export, facilitating access to the Chinese market through ports in South America.

On Wednesday, U.S. soybean futures saw a rise due to bargain buying after the July contract hit a six-week low, partly influenced by firming Brazilian soy markets. However, soybean futures may be affected by a strengthening dollar and ample supply from South America. Additionally, improved weather conditions in the United States and a decrease in palm oil prices, a competitor for soyoil, weighed on soybean prices.

Overall, soybean futures are expected to trade within a bearish trend, with a further decline anticipated, supported by negative pressure from the EMA50. The expected trading range is between $1131.00 support and $1170.00 resistance.

Data for Technical Analysis (1H) CFD US Soybeans Futures - May 24 (ZSK4)

Resistance : 1149.29, 1150.15, 1151.53

Support : 1146.53, 1145.67, 1144.29       

1H Outlook

Source: TradingView 

Buy/Long 1 If the support at the price range 1144.53 - 1146.53 is touched, but the support at 1146.53 cannot be broken, the TP may be set around 1150.32 and the SL around 1143.53, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1149.29 - 1151.29, TP may be set around 1154.00 and SL around 1145.53, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1149.29 - 1151.29 is touched, but the resistance 1149.29 cannot be broken, the TP may be set around 1146.53 and the SL around 1152.29, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1144.53 - 1146.53, TP may be set around 1143.00 and SL around 1150.29, or up to the risk appetite.       

Pivot Points Apr 18, 2024 03:05AM GMT