Not much is going right for downtrodden soybean futures.
After suffering losses of more than 20 cents/bu on Wednesday, the soybean market has now fallen to about four-year lows, with the March contract hovering at about $9.56. As can be seen on the March futures chart below, prices have been trending generally lower for most of the year, with some of the steepest most recent losses occurring since October.
Of course, much of the downward pressure on soybeans has come from rising global supplies. At 4.461 billion bu, the 2024 US soybean crop is estimated up 7% on the year and just slightly below the 2021 record high of 4.464 billion. Meanwhile, led by an expected record crop in Brazil, combined 2024-25 South American soybean production (Brazil, Argentina, and Paraguay) is projected to total more than 232 million tonnes, up almost 20 million or 9.4% from the previous year.
The next couple weeks looks to see continued rains in most of Brazil, helping to push that crop through the growing season. The Brazilian currency also continues to weaken, which is making Brazilian supplies appear more attractively priced compared to American soybeans for foreign buyers.
The potential for a renewed trade war with China under US-President elect Donald Trump – one that would likely ensnare soybeans – has also undermined the soy market, as has uncertainty over the incoming administration’s commitment to biofuels, which use corn and soybean oil as key feedstocks.
Further pressure on soybeans today was linked to a U.S. government funding bill on Tuesday that apparently paves the way for year-round sales of gasoline with a higher blend of corn-based ethanol. It is feared that development could shift some demand away from soybean oil-based alternatives like biodiesel.
In its December supply-demand update, the USDA slashed its 2024-25 US season average soybean price forecast by 60 cents from November to $10.20/bu, a drop of $2.20 or almost 18% from the previous year’s $12.40.
According to the USDA, American farmers received $9.91 on average for a bushel of soybeans in October 2024, down 29 cents from September 2024. In addition, cash prices in November and in the beginning of December were also depressed throughout the country, the USDA added.
March soybeans: Source - Barchart
