Soybean Prices Fall Amid Strong U.S. Crop Forecast and Brazil's Export Dominance

Soybeans fell due to speculative and technical selling. The USDA’s national condition rating is higher than last year, hinting at a potentially large 2024 harvest. Domestic crush demand is strong, but exports lag due to Brazil’s dominance. Brazil's ABIOVE,  the Brazilian Association of Vegetable Oil Industries, predicts 2024 production at 153.2 million tons, with an update from CONAB expected on August 13th. China's July soybean imports were 9.853 million tons, while Brazil exported 11.25 million tons, a 16% increase. Soybean meal prices dropped, bean oil rose, aided by crude oil gains, and Argentina’s oilseed worker strike may disrupt short-term movement.

In mid-September, Brazil will start planting the 2024/25 soybean crop, anticipated to hit a record 165 million tons and export 102 million tons, as per StoneX. As the leading soybean producer and exporter, Brazil’s output and exports are set to grow if weather conditions improve following a tough 2023/24 season.

Productivity is forecasted to rise to 3.55 tons per hectare, but acreage growth will be modest due to lower soybean prices. Brazil plans to plant soybeans on 46.53 million hectares, up from 46.16 million hectares last cycle.

Global soybean supply and demand are expected to balance, influenced by a strong U.S. harvest, which has pressured prices. Brazil’s domestic consumption is projected to rise to 60 million tons, driven by meat and biodiesel production. Despite strong demand, record production may lead to higher ending stocks, estimated at 6.96 million tons, compared to 3 million tons in 2023/24.

Chicago Board of Trade soybean futures declined on Wednesday due to expectations of a large U.S. crop, moderate Midwestern weather, and weak oilseed demand. Global economic concerns and the pace of China's soybean imports further pressured the market, with several soybean futures contracts hitting new lows mid-session.

On Wednesday, soybean futures fell by 5 to 7 cents across most contracts, with September soymeal futures dropping $5.90 per ton, adding pressure. Conversely, soy oil futures rose by 103 points in the September contract, providing some support. The NASS Crop Production report might show an increase in soybean yield to 52.5 bpa, up 0.5 bpa from the previous month's WASDE, with production potentially rising by 35 million bushels to 4.470 billion bushels, despite a projected drop in harvested acres by nearly 150,000.

November soybean futures, after a strong start to the week, faced significant pressure due to growing crop size concerns, with first support outlined at 1013-1015. The U.S. dollar's recovery added to the pressure on futures. Traders prepared for Monday's USDA global supply-and-demand report, which could significantly impact the market if there are acreage adjustments.

Soybean prices consolidated below the bearish channel's resistance line and began Wednesday with a bearish bias, aiming for negative targets starting at $1000.00. The EMA50's negative pressure supports this decline, with a breach of $1035.00 needed to reverse the trend. The expected trading range for this period is between $995.00 support and $1035.00 resistance.

Data for Technical Analysis (1W) CFD US Soybeans Futures - Sep 24 (ZSU4)

Resistance : 1033.28, 1041.13, 1053.83

Support : 1007.88, 1000.03, 987.33

1W Outlook 

Source: TradingView

Buy/Long 1 If the support at the price range 967.88 - 1007.88 is touched, but the support at 1007.88 cannot be broken, the TP may be set around 1035.91 and the SL around 948.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1033.28 - 1073.28, TP may be set around 1095.00 and SL around 988.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1033.28 - 1073.28 is touched, but the resistance 1033.28 cannot be broken, the TP may be set around 1002.66 and the SL around 1093.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 967.88 - 1007.88, TP may be set around 946.00 and SL around 1053.00, or up to the risk appetite.       

Pivot Points Aug 8, 2024 02:42AM GMT