Soybeans Falling Back as USDA Drops Export and Limited China Buying

Soybean futures are trading lower by 12-16 cents, with cash prices also declining, as the market processes new USDA data indicating a reduced U.S. soybean yield of 53 bpa and a 48 mbu cut to production, leading to lower ending stocks of 290 mbu. Despite these supply reductions, the market also absorbed a backlog of 1.348 MMT in previously unreported sales, with a large portion directed to unknown destinations, alongside anticipation for October crush data from NOPA.

Analysis

Soybean futures are experiencing significant losses, down 12 to 16 cents, with cash prices also declining by 15 3/4 cents to $10.57 1/4. This downward pressure follows the release of new USDA data and precedes the upcoming NOPA crush report, indicating a bearish market reaction despite some supply-side adjustments.

The USDA's latest Crop Production data revised the US soybean yield down by 0.5 bpa to 53 bpa, leading to a 48 mbu reduction in total production to 4.253 bbu. Consequently, projected ending stocks for 2024/25 were lowered by 10 mbu to 290 mbu, with global ending stocks also decreasing by 2 MMT to 121.99 MMT. These supply contractions typically suggest price support.

Despite the supply reductions, the market appears to be weighing demand uncertainties, particularly from the 1.348 MMT backlog of unreported sales. While significant, only 332,000 MT were directly attributed to China, with 616,000 MT designated to "Unknown" destinations, potentially signaling less robust direct Chinese demand than anticipated. Furthermore, overall export projections were reduced by 50 mbu, contributing to the negative sentiment.

Investors are now awaiting the NOPA data, expected Monday, which projects October crush at 209.52 mbu and soybean oil stocks at 1.257 billion lbs, an increase from September. These figures will provide further clarity on domestic demand and inventory levels, influencing near-term price action.

Key Decisions for Investors

• Monitor demand indicators closely, particularly the composition of export sales and the upcoming NOPA crush data, to gauge underlying market strength.
• Investors should re-evaluate existing long positions given the current bearish sentiment and price weakness despite supply reductions.
• Prepare for potential volatility around Monday's NOPA report, as its figures on domestic crush and oil stocks will be a significant near-term catalyst.