Soybean Market Continues Downward Trend; Brazilian Exports Strengthen

The soybean market extended its downward trend on the CBOT, hitting a four-year low due to a wave of overselling that followed the latest US acreage and planting report.

As a reference, the average soybean price on June 23 was 14.4 cts/bu, compared to the current average of 11.7 cts/bu.

South America's dominance in the export market remains strong despite a recent increase in US exports, as China's reliance on Brazilian crops strengthens with the end of the harvest season.

Hedgepoint Global Markets analyzed the soybean market, which continued its downward trend initiated last month on the CBOT, reaching a four-year low.

According to Ignacio Espinola, Grain Analyst at Hedgepoint, this decline was due to a wave of overselling after last week's US acreage and planting reports. “This downward trend reflected in CBOT prices, where last year at this time, we saw an average of 14.4 cts/bu, while today we have an average of 11.7 cts/bu,” he said.

American farmers planted 3% more soybeans this year, increasing expectations for a larger harvest. On the other hand, the planted area report released last week showed a reduction from 86.5 million hectares to 86.1 million hectares. The critical crop growth period is typically in August, so some uncertainty about production remains.

Overall, the market is flooded with grains. US farmers are holding onto their physical stocks, hoping prices will rise, and selling just enough to keep operations running.

Meanwhile, Brazil is ending its bean export window and starting its corn export window, which is good news for the US, as they can begin to include soybean sales in their portfolio, especially after November.

Finally, funds have been very aggressive with their short positions, and there may be some profit-taking actions where the short position should be reduced. Currently, the short position is very large, and a reduction could help prices recover.

“Last week, we hit a four-year low, and this can also act as a resistance level for now... At least until we see any other bearish news,” Espinola concluded.