Soybeans Close with Losses on Thursday

Soybean futures closed down 6-7 cents despite USDA data revealing robust old crop export sales of 349,164 MT, exceeding analyst estimates and marking a three-week high, alongside new crop sales of 429,457 MT within expectations. While soymeal futures advanced, soy oil futures declined, with weak bean oil export sales contrasting with a significant increase in May biofuel usage. Market participants are now focused on Friday's USDA monthly crush data, anticipated to show 196.6 million bushels for June, for further insights into demand and supply dynamics.

Analysis

Soybean futures closed lower by 6 to 7 cents, a move that occurred despite several bullish underlying data points. The USDA's export sales report showed old crop sales of 349,164 MT, which surpassed analyst estimates and marked a three-week high. This near-term strength was offset by new crop sales of 429,457 MT which, while within the consensus range, were notable for the continued absence of Chinese purchases, raising questions about longer-term demand. The day's price action was heavily influenced by the product markets, as soymeal futures advanced by up to $2.00/ton while soy oil futures fell sharply by as much as 137 points. This divergence reflects extremely weak bean oil export sales that printed at the low end of estimates. However, a significant counter-signal for oil came from strong domestic demand, with the EIA reporting that 1.025 billion pounds of bean oil were used for biofuel production in May, a substantial increase from 829 million pounds in April. The market is now positioned for the USDA's monthly crush report, with expectations for 196.6 million bushels crushed in June, a figure that will be critical for clarifying processing demand and soy oil inventory levels.

Key Decisions for Investors

• Investors should recognize the conflicting market signals, where strong old-crop export data is being weighed against future demand uncertainty stemming from the lack of Chinese buying, warranting a cautious stance on new long positions.
• The significant performance divergence between rising soymeal futures and falling soy oil futures presents a potential crush spread trading opportunity; traders could evaluate strategies that are long soymeal and short soy oil.
• The upcoming USDA monthly crush data is a critical near-term catalyst; a processing figure above the 196.6 million bushel forecast could provide price support, whereas a miss or oil stocks exceeding the 1.863 billion lbs projection could intensify selling pressure.