SOYBEANS FALL FURTHER BELOW US$ 11 IN CHICAGO WITH DOUBLE-DIGIT LOSSES: PRESSURE FROM SOY OIL AND IMPROVED SOUTH AMERICAN WEATHER DEEPEN SELL-OFF

SOYBEANS EXTENDED THEIR SHARP DECLINE THIS FRIDAY (12), WITH FUTURES IN CHICAGO POSTING DOUBLE-DIGIT LOSSES AND PUSHING THE MARKET EVEN FURTHER AWAY FROM THE US$ 11-PER-BUSHEL LEVEL. AROUND 12 PM (BRASILIA TIME), MAIN CONTRACTS DROPPED BETWEEN 10.75 AND 13 POINTS, CLEARLY REFLECTING A WEEK MARKED BY CONSISTENT WEAKNESS.

LOSSES CONCENTRATE IN NEARBY CONTRACTS

THE JANUARY CONTRACT FELL BACK TO THE US$ 10.80 RANGE, MARCH SLIPPED TO US$ 10.90, AND MAY TRADED AT US$ 11.01 PER BUSHEL. OVER THE WEEK, PRICES HAVE ALREADY ACCUMULATED MORE THAN 20 CENTS OF LOSSES, WITH NO SUPPORTIVE FACTORS STRONG ENOUGH TO REVERSE THE SHORT-TERM TREND.

THE MARKET CONTINUES TO LACK ANY SIGNIFICANT NEWS THAT COULD SPARK A SUSTAINABLE RALLY, WHILE FUNDAMENTAL PRESSURES KEEP BUILDING.

USDA ANNOUNCES SALES TO CHINA, BUT IMPACT IS LIMITED

THROUGHOUT THE WEEK, THE USDA REPORTED THREE NEW SOYBEAN SALES TO CHINA AND OTHER DESTINATIONS, TOTALING MORE THAN 500,000 TONS TO THE ASIAN MARKET ALONE. HOWEVER, THE VOLUMES CAME IN LINE WITH HISTORICAL CHINESE DEMAND FOR THIS PERIOD, RESULTING IN ONLY A MUTED RESPONSE FROM THE FUTURES MARKET.

IN SHORT, THE ANNOUNCEMENT WAS EXPECTED AND DID NOT PROVIDE THE SUPPORT NEEDED TO SHIFT MARKET SENTIMENT.

IMPROVED WEATHER IN SOUTH AMERICA LOWERS RISK PREMIUM

A KEY SOURCE OF PRESSURE IS THE STEADY IMPROVEMENT IN SOUTH AMERICAN WEATHER, ESPECIALLY IN BRAZIL. ACCORDING TO PÁTRIA AGRONEGÓCIOS, MORE FAVORABLE RAINS ARE “REMOVING THE CROP FROM A CLIMATIC RISK SCENARIO,” RAISING EXPECTATIONS FOR A LARGER HARVEST.

AS WEATHER RISK DECLINES, THE MARKET REDUCES ITS “CLIMATE PREMIUM,” WHICH NATURALLY WEIGHS ON FUTURES IN CHICAGO.

SOY OIL AND CRUDE OIL LOSSES INTENSIFY THE DOWNWARD MOVE

BEYOND WEATHER, SHARP DECLINES IN SOY OIL ARE ALSO CONTRIBUTING TO THE SELL-OFF. EARLY IN THE AFTERNOON, SOY OIL FUTURES FELL MORE THAN 1% ON THE CBOT, ADJUSTING POSITIONS AND TRACKING LOSSES IN CRUDE OIL.

WHEN SOY OIL DROPS, THE ENTIRE SOY COMPLEX LOSES VALUE, GIVEN THE SUBPRODUCT’S SIGNIFICANT ROLE IN TOTAL PRICING.

CONCLUSION: A WEAK MARKET AWAITING NEW SUPPORTIVE CATALYSTS

THE COMBINATION OF IMPROVED SOUTH AMERICAN WEATHER, PRESSURE FROM SOY OIL, AND A LACK OF STRONG DEMAND-DRIVEN NEWS HAS CREATED A CONSISTENT SELLING ENVIRONMENT IN CHICAGO.

WITHOUT A NEW SUPPORTIVE DRIVER, WHETHER WEATHER-RELATED, AN UNEXPECTED SURGE IN CHINESE BUYING, OR A SURPRISE SHIFT IN GLOBAL BALANCES, THE MARKET IS LIKELY TO REMAIN UNDER PRESSURE IN THE SHORT TERM.