Soybean Futures Modestly Rise as U.S. Harvest Progresses, Mixed Weather Forecasts in South America

Soybean futures gained modestly due to short covering and technical buying after a weak opening. U.S. harvest progress remains strong, with nearly half of soybeans harvested as of October 7. In South America, rain is forecasted in dry areas, though mixed weather models raise concerns about coverage and duration. Prolonged delays in Brazilian soybean planting could impact second-crop corn yields. The USDA's upcoming WASDE report on October 11 is expected to slightly lower soybean yield forecasts due to late-summer weather.

With the harvest progressing and yields remaining variable across regions, analysts are focused on yield estimates, as acreage adjustments are unlikely. Historically, yield declines are often associated with price increases, though the extent of any price shifts remains uncertain. Soybean stocks are expected to reach 547 million bushels, significantly above last year’s 340 million.

Global soybean markets face downward price pressures due to Brazil’s anticipated yield, coupled with a slowing Chinese economy. Indonesia's increased biodiesel mandate may significantly affect palm oil supplies, impacting the global vegetable oil market.

In Brazil, rainfall has increased recently, accelerating soybean planting, which was previously delayed due to dry soil. By October 6, only 5.1% of Brazil’s soybean acreage was planted, down from 10.1% last year, with Mato Grosso reporting a historic low planting pace. Forecasted rain is expected to support accelerated planting, which may ease speculative pressures on soybean futures.

Meanwhile, Ukraine’s soybean harvest is progressing well, with 73% of the area yielding a crop of 2.26 tons per hectare. Export prices for GMO soybeans in the Black Sea ports initially rose last week but have since fallen, while non-GMO soybeans retained higher prices. Low demand from foreign buyers is adding pressure to Ukraine’s export market, despite a significant rise in September exports compared to August.

Soybean futures have shown mixed performance, as ongoing U.S. harvest progress supports production estimates while conflicting South American weather forecasts add volatility. Prices recently reached the key support level of $1,028.80, where strong support and positive momentum signal potential for an upward move, possibly targeting $1,053.00 and then $1,071.20 in intraday trading. However, a break below $1,028.80 could lead to further declines toward $1,010. During this period, the anticipated trading range is between the $1,020 support and $1,060 resistance levels.

Upcoming USDA reports and U.S. harvest conditions remain critical to market trends. While optimal U.S. weather has accelerated harvesting, some producers are holding out for higher prices given current low profit margins. Overall, weather and harvest updates across the U.S., Brazil, and other key regions will likely shape price movements and market sentiment as traders adjust their positions ahead of the October 11 USDA report.

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

Resistance : 1025.69, 1029.40, 1035.42

Support : 1013.65, 1009.94, 1003.92

1D Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 1003.65 - 1013.65 is touched, but the support at 1013.65 cannot be broken, the TP may be set around 1027.84 and the SL around 998.65, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1025.69 - 1035.69, TP may be set around 1063.00 and SL around 1008.65, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1025.69 - 1035.69 is touched, but the resistance 1025.69 cannot be broken, the TP may be set around 1012.09 and the SL around 1040.69, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1003.65 - 1013.65, TP may be set around 976.50 and SL around 1030.69, or up to the risk appetite.       

Pivot Points Oct 10, 2024 03:43AM GMT