Soybean prices are trying to maintain their recent gains in Chicago, but the lack of details and official confirmation about the supposed Chinese purchases is starting to cause impatience among traders. More cautious analysts warn that as long as US soybean prices are no more competitive than Brazilian prices, and as long as quality does not surpass those offered by the South American giant, China will continue to favor purchases in Brazil and Argentina.
With potential record Brazilian production for the new campaign approaching 185 million tons, the market is wondering how much soybeans from the U.S. China will really need if South American weather is accompanied by soybean supplies of more than 240 million tons of soybeans as a whole. In this context, many analysts believe that the recent recovery may be too optimistic.
While the “bulls” cling to expectations of a strong trade deal between the US and China, the “bears” point out that the price differential and lower premiums for Brazilian soybeans mean that South American soybeans remain cheaper even with the recent reduction in the Chinese tariff to 13%. Without a firm purchase commitment, the Chinese commitment appears more symbolic than guaranteed.
For their part, funds maintain mixed positions: some are reducing exposure to soybeans and flour, while others are betting on an oil recovery.
China cuts purchases, Brazil and Argentina accelerate planting: The World Soybean Board may be about to be reshaped
The soybean market is at a critical stage. While operators wait for decisions on new purchases from China, South American producers are progressing with planting at a higher-than-expected rate. This contradiction represents the pulse of a market that may witness the beginning of a structural change in export leadership, with Brazil and Argentina gradually displacing the United States from the center of the scene.
Favorable weather in key producing regions in South America is boosting confidence in a big crop, while pessimistic analysts warn that high global inventory levels would limit the potential for a new rise in prices. In parallel, climate forecasts begin to show signs of potential drought sources towards the end of November, although the market has not yet reacted to these forecasts.
China, for its part, remains cautious. The partial reduction in US soybean tariffs has not yet been translated into concrete measures, and purchasing decisions appear to be influenced more by political than trade factors. In this context, Brazil continues to dominate the global flow of soybeans, leveraging its competitive advantage and strengthening its position as a new center for the global market.
In the short term, the market will move based on three main factors: confirmation of the US-China trade agreement, the upcoming supply and demand report from the US Department of Agriculture, and weather conditions in South America. Until then, bullish enthusiasm may need a dose of realism.
China has already covered its soybean needs for November, with less than 8 million tons remaining to be secured for the December-January period, with negative profit margins. Market sources indicated that if the trade agreement is not finalized, purchases may be reduced or postponed until part of the internal soybean reserves are liquidated. If such sales occur, they must be completed in November to allow manufacturers to complete the cycle of purchasing, loading, processing and delivering flour before the Lunar New Year, which is celebrated in February.
China is expected to receive 9.5 million tons of soybeans in the next 30 days and up to 17.2 million tons in the next 60 days.
The US Department of Agriculture reveals key data as China sows doubts and global tension increases
This week, the focus of the agricultural market will be on the USDA’s WASDE report, which will be published on Friday (14) and could redefine expectations on US yields, Brazil’s production potential and the development of Chinese demand. Analysts are awaiting an update that will clarify whether recent climate adjustments in the US Midwest have affected the final yield of corn and soybeans, while South America moves forward with their planting under favorable conditions.
Demand signals remain mixed. China has yet to confirm details of new US soybean purchases, while inspections of US exports show a slowdown. However, Beijing’s recent decision to reinstate import licenses for three US agricultural companies was interpreted as a positive gesture, although insufficient to reverse cautious market sentiment.
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