Soybeans Losses Extending on Friday Following USDA Release

Soybean futures are broadly lower, with cash prices down, following the USDA's latest WASDE report which presented a bearish supply outlook. The report increased the U.S. new crop carryout by 15 mbu to 310 mbu, primarily due to a significant 70 mbu cut in exports, partially offset by a 50 mbu rise in crush and a slight production decrease. Globally, the USDA also raised Argentina's production and the 2025/26 world ending stocks by 0.77 MMT to 126.07 MMT, reinforcing expectations of ample supply.

Analysis

The soybean market is facing bearish pressure following the latest USDA WASDE report, which signaled a heavier supply outlook both domestically and globally. The key driver for this sentiment is the U.S. new crop balance sheet, where the projected carryout for 2024/25 was increased by 15 million bushels (mbu) to 310 mbu. This increase occurred despite a minor 5 mbu reduction in production, as it was driven by a substantial 70 mbu cut to the export forecast, which was only partially offset by a 50 mbu increase in crush demand. This revision points to weakening expectations for international demand for U.S. soybeans. The global supply picture reinforces this bearish tone, with the USDA raising its projection for 2025/26 world ending stocks by 0.77 MMT to 126.07 MMT and increasing Argentina's production estimate. The market has reacted directly to this data, with most soybean futures contracts falling 3 to 7 cents and the national average cash price declining by 5 3/4 cents to $9.66.

Key Decisions for Investors

• Given the USDA's upward revision of both U.S. new crop and global ending stocks, investors should anticipate continued downward pressure on soybean prices and consider a cautious or bearish stance on related instruments like the Teucrium Soybean Fund (SOYB).
• The significant 70 mbu reduction in the U.S. export forecast is the primary headwind, making upcoming weekly export sales reports a critical data point to monitor for confirmation of this weakened demand trend.
• While the 50 mbu increase in the domestic crush forecast offers a pocket of demand strength, it is currently insufficient to offset the negative export outlook and rising global inventories, suggesting that risk management for long positions is prudent.