U.S. Soybean Market Faces Supply Challenges and Global Demand Shifts

U.S. soybean prices have surged recently, driven by strong demand from China and other buyers, with 132,000 tons of 2024/25 soybeans purchased. Rising crude and palm oil prices have also supported soybean oil values. Weather conditions in South America are crucial, with Argentina facing dry forecasts and Brazil expecting more rain, both of which could affect yields. A transportation strike in Argentina has caused logistical delays.

For the 2024/25 season, U.S. oilseed production is slightly down to 134.4 million tons, with soybean output forecast at 4.6 billion bushels, reflecting a small yield decrease. Domestic prices for soybeans remain steady at $10.80 per bushel.

Globally, oilseed production is expected to rise slightly, driven by increased sunflower and cottonseed yields, though rapeseed and soybean production has declined. China's intent to collaborate with Russia on soybeans indicates a shift away from U.S. reliance, exacerbated by trade tensions that may lower U.S. exports to China significantly.

In Brazil, tensions with the EU have emerged after Danone decided to stop purchasing Brazilian soybeans, citing EU regulations against deforestation. This decision has sparked criticism from Brazilian farmers and could lead to backlash against European brands perceived as undermining Brazil's agricultural practices.

Soybean and corn futures at the Chicago Board of Trade are under pressure from falling crude oil prices, contributing to potential volatility ahead of the U.S. election. While long-term demand may push prices higher, the market is expected to remain flat until after the election. Recently, soybean futures rose 0.15%, buoyed by weaker-than-expected October exports from Brazil and increased demand from Europe, though gains were limited by a strong U.S. harvest, now 89% complete.

Global demand is complicated by uncertainties in South American crop production. Despite improved moisture in Brazil, shifts in Chinese buying could impact prices. Soybean oil has benefitted from strong palm oil prices, which may support soybeans even if their prices dip.

Fund positioning shows net buying in soyoil, while soybean and soymeal have seen selling. With uncertainties in U.S. soybean exports and fluctuating Brazilian and European demands, crude oil’s recent recovery and steady domestic usage provide near-term support. Analysts predict prices may stabilize around $9.50, especially if Brazil achieves a strong harvest.

On the technical analysis side, soybean prices are showing a bearish trend, gradually moving toward the target of $960.30, driven by ongoing downward pressure from the EMA50 indicator. This negative outlook remains active unless prices break above $1,000, which could shift momentum, leading to short-term gains and a possible test of $1,028.80 before any renewed decline. This period’s expected trading range is between support at $960.00 and resistance at $995.00.

Data for Technical Analysis (1H) CFD US Soybeans Futures - Jan 25 (ZSF5)

Resistance : 995.50, 996.53, 998.20

Support : 992.16, 991.13, 989.46

1H Outlook    

Source: TradingView

Buy/Long 1 If the support at the price range 989.16 - 992.16 is touched, but the support at 992.16 cannot be broken, the TP may be set around 996.41 and the SL around 987.66, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 995.50 - 998.50, TP may be set around 1001.10 and SL around 990.66, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 995.50 - 998.50 is touched, but the resistance 995.50 cannot be broken, the TP may be set around 989.46 and the SL around 1000.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 989.16 - 992.16, TP may be set around 987.67 and SL around 997.0, or up to the risk appetite.       

Pivot Points Oct 31, 2024 04:04PM GMT+7