Soybean Prices Decline Amid Global Supply Shifts, and Weak Demand

The soybean market has been marked by declining prices, influenced by fund and technical selling, alongside global palm oil trends and South American crop conditions. U.S. soybean production for the 2024/25 season is projected at 4.5 billion bushels, a 121-million-bushel reduction due to lower yields in key states like Iowa, Illinois, and Minnesota. Exports are forecast to drop by 25 million bushels to 1.8 billion, with crush estimates lowered by 15 million bushels to 2.4 billion, reflecting reduced domestic and export demand for soybean meal. Ending stocks are expected to decrease by 80 million bushels, settling at 470 million bushels. While the season-average price of soybeans remains steady at $10.80 per bushel, soybean oil prices have increased slightly to 43 cents per pound.

Globally, soybean production for 2024/25 is forecast to fall by 3.5 million tons to 425.4 million, primarily due to lower outputs in the U.S. and India. Despite this, exports are expected to rise with increased shipments from Brazil, Canada, and Benin. Ending stocks worldwide are anticipated to drop by 2.9 million tons to 131.7 million, reflecting reduced inventories in the U.S., Brazil, and Argentina. Brazil continues to lead with record production and export estimates, while India’s production is set to decrease slightly to 12.6 million tons.

China’s soybean imports from the U.S. surged in October, more than doubling compared to the previous year, as buyers accelerated purchases amidst fears of potential trade tensions tied to Donald Trump’s re-election. Nonetheless, Brazil remains China’s primary supplier, accounting for the bulk of October imports with 8.09 million metric tons. Total soybean imports by China for the year are on track for a record high, driven by strong demand and stockpiling efforts, although a decline to 98.8 million tons is anticipated for the year ending September 2025. Meanwhile, favorable weather in South America, particularly Brazil, is expected to support soil moisture and enhance crop prospects, further influencing global supply dynamics.

U.S. soybean futures reached a two-week low on Wednesday, with soyoil futures falling over 3% due to expectations of abundant South American soybean harvests and uncertainty about soy-based biodiesel demand. Front-month soybean prices dipped below $10 per bushel as favorable weather in Brazil, the world's largest soy producer and exporter, improved crop prospects. Brazil is projected to harvest a record 167.7 million tons of soybeans in the 2024/25 season. Declining U.S. soyoil prices were further pressured by reduced biodiesel demand and a higher export tax on Malaysian palm oil.

Analysts expect the CBOT January soybean contract to trade between $9.86-1/4 and $9.90-1/4 per bushel after completing a rebound. Resistance is noted at $9.96-1/2; breaking above this could lead to a rise toward $10.02-3/4 to $10.05-1/2. However, market signals appear neutral within the broader range of $9.83-1/2 to $10.27-3/4. The overall trend leans bearish, with a drop below $9.83-1/2 potentially confirming a bearish wedge pattern and signaling a deeper decline to $9.39-1/2 or even $8.80.

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

Resistance : 998.63, 1002.46, 1008.67

Support : 986.21, 982.38, 976.17

1D Outlook

Source: TradingView 

Buy/Long 1 If the support at the price range 976.21 - 986.21 is touched, but the support at 986.21 cannot be broken, the TP may be set around 999.84 and the SL around 971.21, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 998.63 - 1008.63, TP may be set around 1019.00 and SL around 981.21, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 998.63 - 1008.63 is touched, but the resistance 998.63 cannot be broken, the TP may be set around 983.59 and the SL around 1013.63, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 976.21 - 986.21, TP may be set around 961.00 and SL around 1003.63, or up to the risk appetite.       

Pivot Points Nov 21, 2024 02:14AM GMT