Soybeans Pull Back Ahead of USDA Data Day

Soybean futures closed lower on Wednesday, with nearby contracts leading the decline, while soymeal futures also decreased and soy oil saw gains. The market reacted to forecasts of increased precipitation across much of the US and a tentative agreement between the US and China to ease trade tensions, though existing tariffs remain. Export sales data is anticipated Thursday, with old crop bookings estimated between 100,000-500,000 MT and analysts forecasting slight increases to both old and new crop US soybean carryout.

Analysis

Soybean futures registered a decline in the Wednesday session, with nearby contracts falling by 2 to 7 ¼ cents; specifically, Jul 25 Soybeans closed at $10.50 1/2, down 7 1/4 cents. The cmdtyView Cash Bean price reflected this weakness, dropping 10 3/4 cents to $10.02 1/2. Soymeal futures also softened, down $1 to $1.70 per ton, while soy oil futures posted modest gains of 5 to 23 points. This market movement is occurring amidst forecasts from NOAA indicating widespread precipitation across much of the US, which could enhance crop prospects and weigh on prices. On the trade front, a framework deal between the US and China to ease tensions has been agreed upon, yet the continuation of Chinese tariffs on US goods at 10% signifies that substantial trade barriers persist, limiting immediate market optimism. Market participants are now focused on the upcoming Export Sales data, with old crop bookings for the week of June 5th estimated between 100,000 and 500,000 MT, and new crop sales for 2025/26 anticipated at 0 to 200,000 MT. Analyst consensus points to a slight increase in US soybean carryout, with old crop estimates averaging 353 million bushels and new crop at 298 million bushels, alongside marginal increases in South American production forecasts for Brazil (169.3 MMT) and Argentina (49.1 MMT), collectively contributing to a moderately negative and bearish market sentiment.

Key Decisions for Investors

• Investors should closely monitor the forthcoming Export Sales data, as deviations from the estimated 100,000-500,000 MT range for old crop bookings could trigger notable price volatility.
• Given the current bearish pressures from anticipated favorable weather and only tentative progress in US-China trade relations, it is prudent to assess whether current price levels fully account for potential supply increases and ongoing tariff impacts.
• Significant changes in the US-China trade dynamic, particularly any adjustments to the existing 10% tariff rate or concrete steps towards a comprehensive trade deal, should be watched as key potential catalysts for a shift in market direction.