Soybeans – A Swing and A Miss
Written for Sevita by Kendra Dauer, Risk Management Consultant, FCM Division of StoneX Financial Inc.
The Swing
The soybean market worked its way lower through the end of July, as crop conditions and weather forecasts appeared non-threatening to the U.S. soybean crop. Additionally, tariff headlines fueled managed money to continue to add new short soybean positions – holding their shortest net positions since last December. With the flip of the calendar to August, came the looming reciprocal tariff deadline. Several countries were able to make trade agreements with the U.S., while others (including China, Mexico, and Canada) have yet to reach agreed upon terms. Keeping in mind that any goods that are included in the USMCA agreement are exempt from the increased tariffs. Trade talks continue between the U.S. and China – with both countries agreeing to delay increased tariffs until November. It seems no ground has been covered in these negotiations as we have yet to get preliminary trade details. Additionally, these talks have yet to entice China to purchase U.S. new crop soybeans – as purchases currently sit at zero for the new marketing year. President Trump did indicate that he was encouraging China to increase their soybean purchases from the U.S. with no avail, yet.
The Miss.
And what a miss it was for traders and the USDA report. While the August report is typically when we see surprises from the USDA – this year, it felt like most of the focus was on the corn side of the report. In their August WASDE report, the USDA increased their soybean yield estimate to 53.6 bushels per acre vs. 52.5 previously. This bump in yield was entirely offset by a decrease in soybean planted acres, as we saw 2.5 million acres drop off the balance sheet. Carryout projection now sits at 290 million bushels for the 2025/2026 crop year – a 40 million bushel decrease vs the current marketing year. So, what does this mean going forward? August weather will be closely watched as this month can make or break a soybean crop. The forecast will be closely watched by managed money, as they trim back their short positions in the soybean market. The CFTC report showed the funds short covering nearly 30,000 contracts as of last Tuesday – which does not include the support we saw in the market to end the week. As fund managers grow weary of the true size of the soybean crop, we could see more short covering in the weeks ahead.
The end of July and beginning of August brought a turn in the soybean market – presenting additional marketing opportunities for producers. A rallying market should be rewarded; take advantage of this unforeseen opportunity to manage risk you may still have on the table for new crop soybeans.
For consumers, it feels like now is the time to be patient and wait for the dust to settle in the market. While we might not run back to contract lows, there will likely be buying opportunities in the future – again, manage the risk that you have on the table.
As always, we are not looking for home runs in our marketing plans, just do not let opportunity slip past you by swinging too hard and missing.
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