News summary

CBOT Soybean Fund Clearance from-19bigo18.70,000 lots dropped to-60,000 lots. The market consensus is limited below US soybeans but insufficient upward flexibility. South American cultivated land has been opened up and expanded, global output has increased significantly, and the inventory consumption ratio in 24-25 has risen to the next highest. The response of U.S. soybeans to global inflation lags behind, and the key to tracking excess pressure is Brazil's export CNF quotations and profit squeeze. During the short-sighted period, the price pressure on U.S. soybeans has eased, and long-term excess expectations are difficult to reverse, but the pressure may have reached its peak during the year.

Newsletter text

[Soybean Price Outlook: Supply and demand dynamics and the expansion of cultivated land in South America]

Entering the northern hemisphere planting season, fund bears are vigilant against price fluctuations. Price is not just a fundamentalsbigo18The reflection also affects agricultural plans. Too low prices may signal a decrease in planting area, while excessive fundamentals may signal a price turning point.

Despite market differences, the fund headroom in the CBOT soybean market dropped from-197,000 in early March to-60,000. The current market consensus is that there is limited space under U.S. soybeans, but there is insufficient upward flexibility.

[Loss of balance sheet pricing under the influence of commodity spillover]

In the past three months, the industrial logical pricing power has shifted to macro narrative, and negative demand feedback is mainly reflected in the basis. U.S. soybean prices are affected by the overall commodity market allocation power and the bullish atmosphere of other agricultural products (000061).

Bullishness in the commodity market has increased in the medium term, and real estate policies have become a new positive factor. If the LME copper price exceeds US$15000 per ton, the valuation of U.S. soybeans at 1200 cents per catty will appear low.

[Clues on the expansion of cultivated land in South America and the release of supply-side pressure]

The biggest supply-side change in the global oils and oils market in recent years has been the expansion of Brazilian agriculture. In the past three years, Brazil's soybean production has increased significantly, and the planting area has increased by 22%, posing a challenge to global demand.

According to USDA forecasts, the global soybean stock-to-consumption ratio will rise to the second highest level in history in 24-25. Although global soybean inventory pressure has not limited the upward trend of U.S. soybean prices, if South American supply pressure is released, it may open up the upward trend of U.S. soybeans in advance.

[Exogenous variables of weather, logistics and global terms of trade]

The next "X" factors include weather, logistics and global terms of trade. CBOT soybeans were priced in line with North American drought expectations between May and July. In addition, logistics issues and changes in terms of trade will also affect the market.