Soybeans Following Meal Higher on Wednesday

Soybean futures are experiencing midday gains of 4-5 cents, primarily driven by a robust increase in soymeal futures, which are up $2.80 to $6.60, even as soy oil futures decline. While export sales estimates for old crop beans and meal show a mixed picture with potential net reductions, new crop bean sales are anticipated to be strong at 0.4-1 MMT. Preliminary ProFarmer Crop Tour data reveals significantly higher soybean pod counts in Nebraska, up 15% year-over-year and 19.1% above the three-year average, suggesting a potentially healthy supply outlook despite current price strength.

Analysis

Soybean futures are experiencing modest midday gains, with prices up 4 to 5 cents, a move largely attributable to significant strength in soymeal futures which have surged by $2.80 to $6.60. This rally in the soy complex is not uniform, as it is contrasted by weakness in soy oil futures, down 24 to 26 points, and an outlook for net cancellations in soy oil export sales. The near-term demand picture appears mixed; while estimates for old crop beans and meal are highly uncertain, with ranges spanning from net reductions to modest sales, new crop sales are anticipated to be strong at 0.4 to 1 MMT. Critically, these market movements are occurring against a backdrop of very strong supply signals from the ProFarmer Crop Tour. Soybean pod counts in Nebraska were reported 15% above last year and 19.1% above the 3-year average, and while Indiana's counts dipped 2.31% year-over-year, they remain 6.3% above the 3-year average, collectively pointing to a potentially large U.S. harvest which could cap future price appreciation.

Key Decisions for Investors

• Investors should exercise caution, as the current price increase is primarily driven by soymeal futures and contrasts sharply with strong ProFarmer Crop Tour data from Nebraska and Indiana, which suggest a potentially large harvest and future price headwinds.
• Consider monitoring the soybean crush spread, as the significant divergence between rising soymeal futures and falling soy oil futures could present relative value opportunities for traders.
• Closely monitor the upcoming export sales report, as confirmation of the expected strong new crop sales of between 0.4 and 1 MMT will be critical to sustain upward price momentum against the backdrop of a robust supply outlook.