In Chicago, soybean prices are looking to sustain recent gains, but a lack of details and official confirmation of the alleged Chinese purchases is starting to cause impatience among traders. The most cautious analysts warn that unless U.S. soybean prices are less competitive than Brazilian soybeans and quality exceeds that of South American soybean giants, China will continue to prefer buying from Brazil and Argentina.
Brazil’s production could approach a record 185 million tons in the new campaign, leaving markets wondering how much U.S. soybeans China actually needs if South American weather has left the country with a total soybean supply of more than 240 million tons. In this context, some analysts believe that the recent rebound may have been too optimistic.
While the “bulls” are clinging to hopes of a solid US-China trade deal, the “bears” point out that price differentials and lower premiums for Brazilian soybeans mean South American soybeans are still cheaper, despite China’s recent reduction in tariffs to 13%. Without firm purchase obligations, China’s commitments look more symbolic than guaranteed.
Each fund maintains different positions. Some funds are reducing exposure to soybeans and flour, while others are betting on an oil recovery.
China curbs purchases, Brazil and Argentina accelerate planting: World soybean board may soon be reconstituted
The soybean market is at a decisive stage. While managers await decisions on new purchases from China, South American producers are sowing at a faster-than-expected pace. This contrast points to the pulse of a market in which Brazil and Argentina may be experiencing the beginnings of a structural shift in export leadership, gradually displacing the United States from center stage.
While good weather in South America’s main producing region boosts confidence in a big harvest, bearish analysts warn that high global inventory levels limit the potential for new price increases. At the same time, climate forecasts are starting to show signs of a potential drought towards the end of November, although markets have not yet reacted to these forecasts.
China also remains cautious. Some reductions in tariffs on U.S. soybeans have not yet been translated into concrete measures, and purchasing decisions appear to be influenced more by political than commercial factors. In this context, global soybean flows continue to be dominated by Brazil, which is leveraging its competitive advantages to strengthen its position as the new epicenter of the global market.
In the short term, markets will be driven by three key factors: confirmation of the US-China trade deal, the upcoming USDA supply and demand report, and weather conditions in South America. Until then, bullish enthusiasm may require some realism.
China has already met its soybean demand for November, leaving less than 8 million tonnes of soybeans to be secured from December to January with negative profit margins. Market players suggested that if a trade deal is not finalized, purchases could be reduced or delayed until some of the country’s soybean stockpile is liquidated. If these sales take place, they must be completed in November so that processors can complete the flour purchasing, loading, processing, and delivery cycle in time for Lunar New Year, which is celebrated in February.
China is estimated 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.
Agriculture Department to release important data as suspicions spread over China and global tensions rise
The focus of agricultural markets this week will be the USDA WASDE report released on Friday (14th), which could redefine expectations about U.S. yields, Brazil’s productivity potential, and the evolution of Chinese demand. Analysts are awaiting updates on whether recent climate adjustments in the U.S. Midwest have affected final yields of corn and soybeans, while South America continues to advance planting under favorable conditions.
Demand signals remain mixed. China has not yet confirmed details about new purchases of U.S. soybeans, but U.S. export inspections show a slowdown. However, the Chinese government’s recent decision to reinstate import permits for three US agricultural companies was interpreted as a positive gesture, although not enough to overturn cautious market sentiment.
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