Soybean Market Faces Mixed Movements Amid Weather Concerns and Global Supply Shifts

Soybeans experienced mixed market movements due to various factors. Prices were initially higher due to short covering and technical buying, driven by concerns over hot weather potentially stressing crops. Cooler temperatures and some rain are expected later, which might affect USDA's yield estimates, due to be updated in September. Argentina is expected to increase soybean acreage next season, reducing corn acreage due to past crop issues, while U.S. soybean sales have slowed after a recent demand spike.

Conversely, soybeans recently saw declines due to speculative and technical selling, despite scattered rains in the Midwest. Expectations for record yields continue to influence the market, with China purchasing significant new U.S. soybean crops. Soybean meal prices decreased, while bean oil prices increased. Canada's soybean production is forecasted to rise slightly due to better growing conditions.

The 2024/25 U.S. soybean outlook predicts higher production, exports, and ending stocks, with a record forecast of 4.6 billion bushels. U.S. soybean exports face challenges due to a doubling of Argentina's crop, strong Brazilian exports despite a smaller harvest, and slow Chinese buying.

The USDA expects global soybean production to increase, driven by higher outputs in several countries, including the U.S. and Brazil. Pro Farmer, however, forecasts an even larger U.S. soybean harvest than the USDA, potentially setting a new record. Weather and yield predictions continue to play a significant role in grain markets globally, with varying impacts on soybean prices. Projections indicate strong U.S. demand, partly due to competitive pricing.

Canadian farmers are expected to produce more soybeans this year due to better growing conditions in Western Canada as of the end of July. However, moisture shortages and high temperatures remain concerns in the Canadian prairies. Nationally, soybean production is estimated to rise by 2.4%, with harvested area expanding by 2.0%.

In Brazil, soybean production has expanded rapidly, making the country a dominant global supplier. However, recent price slumps and lower profit margins may slow the pace of expansion. Global soybean stocks are expected to reach record levels, driven by Brazil's substantial output and high U.S. production. Both countries may need to reconsider planting strategies for future seasons, especially if Chinese demand remains weak.

On Wednesday, soybean futures fell for the first time in four sessions, retreating from a recent two-week high. Soybean futures experienced losses of 6 to 8 cents, while soymeal futures dropped $5 per ton in September contracts. However, soy oil futures rose by 31 points. Additionally, a private export sale of 264,000 metric tons of soybeans was made to China for the 2024/25 season.

Soybean prices are showing some positive movement, attempting to break through the resistance line of a bearish channel. However, the stochastic indicator is giving negative signals, suggesting that the bearish trend may continue. The price is expected to drop to $973.00 as the first target, and if it breaks this level, it could fall further to $960.30 and then $930.00 as the main targets.

If the price instead breaches $998.00, it would halt the decline and potentially start a bullish correction on an intraday basis. The expected trading range for this period is between $970.00 support and $995.00 resistance, with the overall trend forecast remaining bearish.

Data for Technical Analysis (1H) CFD US Soybeans Futures - Nov 24 (ZSX4)

Resistance : 980.17, 980.82, 981.87

Support : 978.07, 977.42, 976.37  

1H Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 976.57 - 978.07 is touched, but the support at 978.07 cannot be broken, the TP may be set around 980.74 and the SL around 975.82, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 980.17 - 981.67, TP may be set around 984.00 and SL around 977.32, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 980.17 - 981.67 is touched, but the resistance 980.17 cannot be broken, the TP may be set around 977.99 and the SL around 982.42, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 976.57 - 978.07, TP may be set around 973.50 and SL around 979.42, or up to the risk appetite.       

Pivot Points Aug 29, 2024 03:46AM GMT

Sources: ZAWYA, Economies.com