Facts
- USDA will release the WASDE report today at 17:00 Polish time; soybean ending stocks are expected to fall by 2 million bushels to 348 million bushels, while Price Futures Group points to prospects for abundant soybean crops in South America.
- USDA announced a soybean sale to China, but the transaction size—264,000 metric tons—does not automatically imply strong, confirmed demand or physical shipments. The report did not trigger a meaningful bullish reaction in soybean futures.
- CBOT soybean seasonality suggests historically weaker performance in mid-February.
Recommendation
- Short position on SOYBEAN at market price
- Take profit: 1057
- Stop loss: 1138
Opinion
Overall sentiment in the soybean market has cooled somewhat, despite the latest price rebound. The move higher has been driven largely by political factors rather than a genuine improvement in demand, as reflected in the limited response from importers. Despite political pressure from the U.S., China has recently directed purchases toward Brazil, signaling that buying decisions remain a function of price and logistics. A key competitiveness metric is the FOB price spread: Brazil ($415.37/t) versus the U.S. ($451.86/t), which continues to work against U.S. soybeans (higher quality, but materially more expensive), further compounded by freight costs to China.
Elevated CBOT prices may lead to classic demand destruction, consistent with market commentary pointing to declining feasibility of commercial buying. In addition, while U.S. crush margins remain positive (around $4.59/t), they are not a sufficient catalyst to offset weak export dynamics. Brazil continues to offer flexible and stable supply—via both state-linked and private channels—which caps upside potential for Chicago futures. Any upward revision to South American supply estimates in today’s WASDE could further undermine the market’s belief in large-scale Chinese buying from the U.S., making that variable a key driver of the price response.
Uncertainty around biofuel regulations (RVO) and the lack of clear demand-side support from the EPA further weaken the market’s fundamentals. As a result, the latest gains should be viewed as corrective moves, driven largely by newsflow and speculative positioning—ultimately more likely to represent selling opportunities than the start of a durable uptrend. Without a real shift in China’s demand for U.S. soybeans, sustaining current momentum will be difficult. And while Trump has called on China to increase export purchases in the 2025/26 season, this remains more of a speculative narrative than a fundamental reality. Considering seasonality, the high price of U.S. soybeans in global markets, and the risk of a South American supply surprise, we recommend holding a short position in SOYBEAN with a target at 1057 and take profit at 1112, where prior significant price reactions have occurred.
Source: xStation5
