Soybean Prices Drop Amid Hot, Dry Weather and Low Export Demand

Soybean prices dropped due to technical and fund selling, despite a dip in the USDA’s national condition rating, which is still higher than last year. This decline was mainly due to hot, dry weather in parts of the growing region. Some rain is expected, which may help but also cause flooding or storms. Export demand remains low, particularly for new crops, with Brazil dominating the market. Soybean meal prices fell on profit-taking and competition from Argentina, while soybean oil declined due to continued selling. Upcoming reports from CONAB and the USDA will provide updated forecasts.

For the 2024/25 U.S. soybean outlook, higher beginning and ending stocks are expected due to reduced crush and lower domestic use, slightly offset by higher exports. Ending stocks are projected at 455 million bushels, with prices stable at $11.20 per bushel.

Global oilseed production is forecasted to decrease, particularly in rapeseed for Australia and the EU. Lower beginning and ending stocks for global soybeans are anticipated, with adjustments for Brazil and Paraguay due to production and export changes. EU weekly soybean imports totaled 227,693 tonnes, with Germany, Spain, and Italy being the largest importers. Total imports for the marketing year are down 1% from last year.

The soybean market is projected to grow from USD 156.10 billion in 2023 to USD 232.98 billion by 2032, with a compound annual growth rate (CAGR) of 4.6% from 2024 to 2032. The rising demand for animal feed and plant-based nutrition, driven by population growth and health consciousness, fuels this growth. Increased meat and dairy consumption drives soybean demand in animal feed, while soy-based food products and biodiesel further boost market growth.

On Tuesday, CBOT soybean futures fell as traders evaluated the impact of central U.S. flooding and heat on crops. Analysts suggest that while flooding has caused logistical issues, its overall market impact is uncertain until crop losses are clearer. Moisture may benefit crops more than harm them, keeping large ending stocks and limiting potential rallies.

Overnight trading on Wednesday saw a slight increase in soybeans due to unsettled U.S. weather affecting newly planted crops. Soymeal and Soy Oil futures also saw significant declines. Quarterly Grain Stocks data is expected to show 962 million bushels of soybeans at the end of the third quarter, up from 796 million last year.

Soybean prices fell after testing the $1131.40 level, suggesting a continued bearish trend with a target of $1100.00. Positive market conditions might temporarily test resistance at $1130.00 before declining again, with the bearish trend persisting as long as prices stay below $1131.40. The expected trading range for this period is between $1100.00 support and $1130.00 resistance.

Data for Technical Analysis (1H) CFD US Soybeans Futures - Aug 24 (ZSQ4)

Resistance : 1145.54, 1146.30, 1147.55

Support : 1143.04, 1142.28, 1141.03       

1H Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 1138.04 - 1143.04 is touched, but the support at 1143.04 cannot be broken, the TP may be set around 1146.46 and the SL around 1136.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1145.54 - 1150.54, TP may be set around 1153.00 and SL around 1141.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1145.54 - 1150.54 is touched, but the resistance 1145.54 cannot be broken, the TP may be set around 1143.04 and the SL around 1153.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1138.04 - 1143.04, TP may be set around 1135.00 and SL around 1148.00, or up to the risk appetite.       

Pivot Points Jun 27, 2024 03:56AM GMT

Sources: ZAWYA,  Economies.com