Soybeans Mixed as Products Diverge

Soybean futures are mixed, with July contracts down slightly while new crop contracts are up, driven by volatility in soyoil, which is up sharply; soymeal is down following an EPA announcement. Export inspections are down significantly both from the previous week and year-over-year, though marketing year shipments remain up 11.1% from last year. May NOPA crush data showed a record 192.83 million bushels crushed, exceeding last year's figure by 5.01%, while soybean oil stocks decreased 10.02% from last month.

Analysis

Soybean futures present a mixed picture: July contracts softened by 1 ¼ cents, while new crop contracts advanced by 2 to 4 cents, reflecting divergent market pressures. A significant driver is the soy product complex, where Soy Oil futures surged 398 points, utilizing expanded 450-point daily limits, while Soymeal futures dropped $7.70/ton following an adverse EPA announcement. Weekly export inspections for soybeans ending June 12th were substantially lower at 215,803 metric tons (MT), down 61.4% week-on-week and 36.7% year-on-year, although marketing year-to-date shipments remain robust, up 11.1% annually at 45.416 million metric tons (MMT). Domestic processing remains strong, with National Oilseed Processors Association (NOPA) data showing a record May crush of 192.83 million bushels, a 5.01% increase from May of the previous year and 1.37% above April's figure, despite falling slightly short of market estimates. This strong crush activity, coupled with a 10.02% monthly and 20.34% annual decrease in soybean oil stocks to 1.37 billion gallons, indicates firm demand for oil. Furthermore, the CFTC's Commitment of Traders report revealed that managed money increased its net long position in soybeans by 17,038 contracts to 25,639 contracts as of June 10th, signaling heightened bullish speculative interest.

Key Decisions for Investors

• Investors should closely monitor the evolving spread between old-crop (July) and new-crop soybean futures, as current pricing reflects distinct near-term supply tightness, particularly in soy oil, versus longer-term harvest outlooks.
• It is prudent to evaluate the sustainability of the rally in soy oil futures and its ability to offset weakness in soymeal and the recent sharp decline in weekly export inspection volumes, as these competing factors are creating volatility.
• The record May NOPA crush rate and declining soybean oil inventories, alongside increased net long positioning by managed money, suggest underlying demand strength, but investors should remain vigilant for shifts in export demand or changes in the EPA's stance on biofuels which could further impact the soy complex.