Soybeans Starting Friday with Penny Losses

Soybean futures are experiencing early Friday losses, following mixed Thursday trade, despite rising open interest. Weekly export sales for 2025/26 soybeans fell significantly to 724,459 MT, down 21.5% from last week and half of last year, primarily due to the absence of Chinese purchases amidst ongoing US tariff disputes. This demand weakness is compounded by Argentina lifting its export tax suspension after hitting a $7 billion target, potentially increasing global supply and further pressuring prices.

Analysis

Soybean futures are exhibiting weakness, with early Friday trading showing losses of 1 to 1.5 cents, partially erasing the prior day's modest gains. While preliminary open interest rose by 12,888 contracts, suggesting new market participation, the dominant factor is deteriorating export demand. The latest Export Sales data revealed a significant decline in 2025/26 soybean sales to 724,459 MT, which is 21.5% lower than the previous week and 50% below the same week last year. This sharp drop is directly attributed to the absence of Chinese purchases, a situation highlighted by a Chinese commerce ministry spokesperson's call for the US to eliminate tariffs. Compounding this demand-side pressure is a bearish supply-side development from Argentina, which has lifted its export tax suspension after reaching a $7 billion export target, potentially increasing global supply competition. The market for soybean derivatives is mixed, with soymeal futures declining on sales at the low end of estimates, while soy oil futures rose on sales at the high end of expectations, indicating divergent demand for the crushed products.

Key Decisions for Investors

• Investors should exercise caution on long soybean positions, as the combination of a 50% year-over-year drop in weekly export sales and the removal of Argentina's export tax suspension creates significant headwinds.
• Monitor US-China trade developments closely, as any positive resolution or large-scale Chinese purchase would be a primary catalyst for a reversal in the current bearish sentiment.
• Consider relative value strategies, such as long soy oil against short soymeal or soybeans, to potentially capitalize on the diverging demand trends where oil sales are outperforming.
• Factor in the increased competition from Argentinian supply, which is likely to cap the upside potential for US soybean futures in the near term.