Soybeans Come Back to Close Mixed on Thursday

Soybean futures closed with mixed trade, as August contracts saw a slight decline while deferred contracts edged higher and cash prices firmed. Soymeal futures were down, though soy oil futures posted gains. USDA's latest Export Sales report indicated old crop soybean bookings were down 60.8% week-over-week but up 81.5% year-over-year, while new crop sales hit a four-week low at 238,816 MT. Furthermore, soybean meal and bean oil sales were reported at the lower end of market expectations, suggesting a generally subdued demand outlook for these commodities.

Analysis

The soybean market is demonstrating mixed signals, characterized by a split in futures pricing and weak underlying demand indicators from the latest USDA report. While deferred contracts posted marginal gains of up to 2 cents and the new crop cash price firmed by 1 1/4 cents to $9.73 1/4, the front-month August contract declined by 1 1/2 cents. This price action is set against a backdrop of lackluster export sales. Old crop bookings, at 160,872 MT, fell 60.8% from the prior week, and more critically, new crop sales hit a four-week low at 238,816 MT. The weakness extends to processed products, with both soymeal sales (274,517 MT) and soy oil sales (net reductions of 599 MT for 2024/25) registering at the low end of market expectations. This suggests that current demand for U.S. soybeans and their derivatives is subdued, creating headwinds for prices despite some resilience in cash and deferred futures.

Key Decisions for Investors

• Given that new crop sales have hit a four-week low and both meal and oil sales are at the bottom of expectations, investors should closely monitor subsequent USDA Export Sales reports for any signs of improving demand before establishing significant long positions.
• The divergence between falling soymeal futures and rising soy oil futures warrants attention; traders should analyze the soybean crush spread, as this dynamic could indicate shifting fundamentals between the animal feed and edible oil/biofuel sectors.
• The market's contango structure, with the August contract weakening while the November contract firmed, suggests near-term bearish sentiment, and investors may consider strategies that capitalize on this calendar spread, while remaining cautious of the weak new crop sales data which could pressure deferred months.