Soybeans Rally on Easing Trade Tensions

Soybean futures rose on Thursday following a phone call between President Trump and President Xi focused on trade, with contracts up 6 to 9 cents across most months. Export sales data for the week of May 29 showed 194,345 MT of soybeans booked, on the lower side of trade estimates, while soybean meal and oil sales were also reported at the low end of estimates and the lowest in several weeks, respectively. Despite weaker sales, monthly census data revealed strong soybean, meal, and oil exports in April, with bean oil shipments hitting a 16-year high for the month.

Analysis

Soybean futures experienced a notable increase, with contracts rising 6 to 9 cents across most months, such as Jul 25 Soybeans closing at $10.51 3/4 (up 6 3/4 cents), following a phone discussion between U.S. President Trump and Chinese President Xi focused on trade relations. This diplomatic engagement, which hinted at further negotiations, appeared to be the primary market driver, supported by a cmdtyView Cash Bean price increase to $10.09 (up 9 cents). The positive sentiment in soybeans contrasted with mixed movements in related products; soymeal futures were steady to $2.40/ton higher, while soy oil futures saw front months decline 1 to 16 points. This price action occurred despite U.S. export sales data for the week of May 29 indicating bookings of 194,345 MT for 2024/25 soybeans, at the lower end of trade estimates (100,000-500,000 MT), though this was an increase from the prior week and 2.5% larger year-over-year. Significantly, China currently holds zero unshipped U.S. soybean sales. New crop soybean business was minimal at 3,544 MT, a six-week low. Soybean meal sales of 264,940 MT were at the low end of estimates and a four-week low, and soybean oil sales of 11,780 MT, while within estimates, were the lowest in five weeks. However, April's census data painted a stronger historical picture, with soybean shipments at 2.18 MMT (up 23.17% YoY), soybean meal exports at a record 1.346 MMT for April, and bean oil shipments at a 16-year high for the month (159,050 MT). Brazilian soybean shipments also rose in May to 14.099 MMT, up from 13.436 MMT year-over-year, indicating persistent global supply competition.

Key Decisions for Investors

• Investors should closely monitor developments in U.S.-China trade negotiations, as these appear to be a primary short-term driver for soybean prices, despite recent weaker U.S. export sales figures.
• Consider the dichotomy between strong historical April export volumes and the recent slowdown in weekly sales, particularly the absence of outstanding Chinese purchases, when assessing medium-term demand.
• Factor in the robust Brazilian export pace, which could cap significant price upside for U.S. soybeans if global demand does not sufficiently expand or if U.S.-China trade relations do not materially improve.