
It seems, the Christmas rally for soybean futures only amounted to a mere 25 cents this year. A far cry from the average rally over the past decade which was closer to 90 cents.
What’s happened
The December USDA WASDE report was the nail in the coffin for prices as the balance sheets continued to show record global supplies.
Projected U.S. 2024-25 ending stocks didn’t budge, coming in at 470 million bushels. By comparison, the ending stocks for the prior crop year were pegged at 342 million bushels.
The bigger negative fundamental for soybean prices, however, stems from the record carryout levels at the global level. Global soybean ending stocks for the 2024-25 crop year are at a resounding 131.87 million metric tons. The largest in history.
To put that in perspective, that global ending stock number of 131.87 mmt, is slightly larger than the entire U.S. soybean crop harvested in 2024. To compare, the USDA has U.S. soybean production pegged at 121.42 mmt, or roughly 4.46 billion bushels. Let that sink in.
From a marketing perspective
The crop recently planted in Brazil is expected to be record large. Weather issues for that country have been very limited. The most recent USDA report has Brazilian soybean production for the 2024-25 crop year pegged at 169 mmt, up from 153 mmt last year.
Not helping is the currency exchange rate. The U.S. dollar has rallied since October 2024 while the Brazilian real fell lower during that same time frame. This is making it cheaper for other countries to want to buy Brazil soybeans (not U.S. soybeans) due to the currency exchange rate.
Prepare yourself
Time to get real. The weight of abundant global supplies has recently triggered selling of soybean futures contracts.
From a technical perspective, and with hindsight, a potential “head and shoulders formation” occurred on daily March 2025 futures charts. This head and shoulders formation is often interpreted as a “topping signal” which can measure what the potential price breakout to the downside might be.
In this case, the technical indicator suggested that a $1 price breakout to the downside could be a possibility.
This might take March 2025 soybean futures down toward the $9 price area over the course of the coming weeks.
What could turn this market around? It would take a flash of fresh friendly demand news, a sudden turn of the weather in South America, good news on the biofuels front, and a lack of trade wars come January with the new administration.
Challenging to say the least. Stay defensive for now but watch for potential opportunities that may occur in the New Year.
Reach Naomi Blohm at 800-334-9779, on X: @naomiblohm, and at [email protected].
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