Soybeans Falling Back on Thursday Trade, as Bean Oil Adds Pressure

Soybean futures traded lower midday, with August contracts expiring, despite gains in soymeal and soy oil. While old crop export sales showed net reductions, new crop sales surged to a marketing year high of 1.133 MMT, exceeding estimates and notably excluding Chinese participation. This strong forward demand is balanced by increased Brazilian crop estimates, with CONAB projecting 169.65 MMT, setting a mixed supply-demand backdrop ahead of Friday's NOPA crush report.

Analysis

The soybean market is exhibiting conflicting signals, with futures contracts trading down 11 to 14 cents midday despite gains in derivative products like soymeal and soy oil. This price weakness occurs against a backdrop of bifurcated demand data. Old crop export sales posted a net reduction of 377,610 MT, a marketing year low that was below estimates, though this is seasonally typical as the marketing year concludes. In stark contrast, new crop sales were exceptionally strong at 1.133 MMT, a marketing year high that surpassed analyst expectations and was 15% above the same period last year, notably achieved without Chinese involvement. This robust forward demand is being counterbalanced by an increasingly bearish supply outlook, as Brazil's CONAB raised its soybean crop estimate to 169.65 MMT. The market is now focused on the upcoming NOPA crush data, with analysts anticipating a 191.59 million bushel crush for July, which will be a key indicator for domestic demand.

Key Decisions for Investors

• Investors should recognize the current tension between very strong new crop export demand, a bullish long-term signal, and increasing South American supply estimates, which is a key bearish headwind.
• Given the divergence between falling soybean futures and rising soymeal futures, traders could evaluate crush spread opportunities to isolate the relative strength in processed products.
• The upcoming NOPA crush report on Friday is a critical near-term catalyst; a figure exceeding the 191.59 mbu estimate could support prices by confirming strong domestic demand, while a miss would amplify supply-side pressures.
• The weakness in old crop sales is largely seasonal and should be discounted in favor of monitoring the robust new crop bookings, which suggest a solid demand floor for the next marketing year.