Soybeans Mostly Weaker to Start Friday

Soybean futures are trading mostly lower following recent declines, despite a modest rise in cash prices. While USDA data revealed robust old crop soybean export sales at a three-week high (349,164 MT) and strong new crop bookings (429,457 MT), demand for bean meal and oil was notably weak, with oil sales at the low end of estimates. This mixed export picture, alongside increased bean oil usage for biofuel, positions upcoming USDA crush data as a key market focus, with analysts anticipating 196.6 million bushels for June.

Analysis

The soybean market is presenting a mixed-signal environment, characterized by downward pressure on futures contracts despite some underlying demand strengths. While most futures contracts are trading 2 to 3 cents lower, following a 6 to 7 cent loss in the prior session, the national average cash price has edged up 4 cents to $9.34 ¾. A key bullish indicator is the robust old crop export sales, which reached a three-week high of 349,164 MT, alongside solid new crop sales of 429,457 MT. However, this strength is undermined by notable weaknesses in derivative products. Bean meal bookings at 209,095 MT were barely within the expected range, and bean oil export sales were exceptionally low at 2,525 MT for the 2024/25 marketing year. This divergence is also reflected in futures, with soymeal seeing modest gains while soy oil futures fell sharply by 92 to 137 points. A significant factor for soy oil is its growing use in biofuels, with the EIA reporting a jump to 1.025 billion lbs used in May, up from 829 million lbs in April. Market focus is now shifting to the upcoming USDA monthly crush data, where analysts anticipate a figure of 196.6 million bushels for June, which will provide further clarity on domestic demand.

Key Decisions for Investors

• Investors should closely monitor the upcoming USDA crush report, as a figure exceeding the 196.6 million bushel estimate could signal strong domestic demand, potentially offsetting weak export sales for soybean oil.
• The absence of China in new crop soybean purchases is a significant bearish factor; any announcements of Chinese buying would act as a strong bullish catalyst and should be watched for closely.
• Given the divergence between strong soybean demand and weak soy oil export demand, traders should analyze the crush spread to gauge processor margins and underlying demand from this key sector.
• The substantial increase in bean oil usage for biofuel production highlights a growing demand channel, making it prudent to track renewable fuel policy and energy market trends as a key driver for the soy complex.