Soybean Prices Slip Amid U.S.-China Trade Tensions, Brazil Strengthens Market Lead

Soybean prices declined on Wednesday due to profit-taking and technical selling, retreating from recent multi-month highs. The market downturn was driven by renewed concerns over U.S. tariffs on China, with President Donald Trump announcing a February 1 deadline for 10% tariffs on Chinese goods, sparking fears of retaliatory measures from China, the world’s largest soybean importer.

The earlier rally in prices had been supported by hopes that immediate tariffs might be avoided. However, China’s suspension of soybean imports from five Brazilian firms, citing phytosanitary issues, further weighed on sentiment. Analysts speculate that this move may reflect strategic leverage or market manipulation by China amid Brazil’s robust export performance, underscoring its growing dominance in the global soybean market.

Brazil is on track to produce a record soybean crop of 171.7 million metric tons, bolstered by favorable yields despite delays caused by excessive rain. Meanwhile, drought in Argentina threatens crop yields, adding to global supply uncertainties. These developments highlight Brazil’s increasing role in meeting China’s surging soybean demand, which reached a record 105 million metric tons in 2024. Brazil now accounts for 73% of China’s soybean imports, capturing a larger market share at the expense of U.S. exporters, who continue to face geopolitical headwinds and tighter domestic supplies.

In the U.S., soybean production for 2024/25 is estimated at 4.4 billion bushels, reflecting a significant drop due to lower yields in key states. Ending stocks are projected at 380 million bushels, down 90 million from previous estimates, despite stable exports and crush activity. The U.S. agricultural sector is further challenged by a strong dollar, which has made its exports less competitive globally, and evolving trade policies that impact market dynamics.

The global oilseed market remains volatile, with Brazil’s strong soybean meal exports driving increased global crush volumes. However, declines in oilseed production from Russia, India, and China are partially offset by gains in sunflowerseed and cottonseed output. Grain market sentiment remains divided, with soybeans trading around $10.50 per bushel after the recent pullback but still below harvest peaks. Long-term price movements will depend on geopolitical developments, production efficiency, and weather conditions in key producing regions, as well as shifts in trade policies that continue to reshape global agricultural markets.

Soybean prices continue to show a bullish bias, approaching the $1,070 level and reinforcing expectations of an ongoing upward trend. The next target is set at $1,080, supported by the active influence of the inverted head-and-shoulders pattern. However, a break below $1,050 could trigger intraday negative pressure, potentially driving prices to test the key support level at $1,014.50 before any renewed upward attempts. For this period, the expected trading range is between $1,055 support and $1,085 resistance, with the overall trend forecast remaining bullish.

Data for Technical Analysis (1H) CFD US Soybeans Futures - Mar 25 (ZSH5)

Resistance : 1058.32, 1059.71, 1061.95

Support : 1053.84, 1052.45, 1050.21            

1H Outlook   

Source: TradingView      

Buy/Long 1 If the support at the price range 1048.84 - 1053.84 is touched, but the support at 1053.84 cannot be broken, the TP may be set around 1059.41 and the SL around 1046.34, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1058.32 – 1063.32, TP may be set around 1067.50 and SL around 1051.34, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1058.32 – 1063.32 is touched, but the resistance 1058.32 cannot be broken, the TP may be set around 1053.54 and the SL around 1065.82, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1048.84 - 1053.84, TP may be set around 1045.00 and SL around 1060.82, or up to the risk appetite.       

Pivot Points Jan 23, 2025 02:37AM GMT