Soybeans - Whiplash
Written for Sevita by Kendra Dauer, Risk Management Consultant, FCM Division of StoneX Financial Inc.
The Whip
After being thrown a life raft in the month of January from the index funds wanting to put their money into the commodity complex, the bean market struggled a bit more in February. At the beginning of the month, the front-month contract, March, traded up to $10.80 before losing nearly 60 cents by mid-month. President Trump had announced tariffs on China, Canada, and Mexico to start the month of February, but the Canada and Mexico tariffs were quickly postponed. Chinese tariffs have not been postponed but China has also not placed reciprocal tariffs on U.S. grains or oilseeds specifically. The lack of meaningful tariff impacts, so far, allowed the bean market to relax lower.
To add to the easing of fears we were once again reminded mid-month by the USDA that the U.S. is still facing a whopping 380-million-bushel carryout. The large carryout does not look to be threatened by an increase in demand from either exports or crush. While both aspects of demand have performed well so far this marketing year many are questioning if the rapid pace can continue.
The Pivot
By mid-month the March soybean contract had fallen to the 50-day moving average and found technical support there. Inflation fears due to tariffs seemed to return and entice active fund buying in the corn market which offered support to the bean market as well. The new crop corn-to-soybean ratio allowed the corn market to gain momementum higher as it looked for additional corn acres in 2025 and the bean market did not want to be left behind. The new crop acreage story has quickly become the front-page story as that clearly drives the suppy and demand situation for the next eighteen months. Many analysts believe that bean acres will decline as producers switch acres to corn.
The Lash
After bouncing off the 50-day moving average the bean market added 25 cents over roughly 6 very volatile days. Volatility has truly been the name of the game for the bean market so far this calendar year and February was no different. A fifteen to twenty cent trading range, or more, each day was common over the last month. As we mentioned last month the funds are net long in the bean market today, even if not massively so. Regardless, the added fund involvement allows the market to be extremely headline driven. When facing a new administration and quickly changing policy and direction it is important to keep grain marketing at the top of your to-do list.
With volatility so high and quickly changing market dynamics it is important for producers to keep their head on a swivel. Be nimble but also be steadfast in their grain marketing plan for 2025. By having a plan and sticking to it while learning to capitalize on the volatility producers can avoid feeling the whiplash of the grain markets.
Recent Articles
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//Market ReportRockets Away
Since the writing of the comments in January the front-month bean contract has rallied nearly a dollar. As we mentioned in last month’s comments the tides seemed to have turned in the month of January as we saw China finally beginning to full fill some of their purchase agreements and shipments of beans begin to occur. Additionally, we saw the January supply/demand report from the USDA. As those tides turned we also so more conversations between U.S. President Trump and
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//Market ReportTurning of the Tide?
Following the price decline in December, the soybean market seemed to find some footing through the flip of the calendar. New reports that China was beginning to auction off state reserves – this would make room for China’s new soybean purchases from the U.S. and in the market’s eyes ‘new demand.’ Using the quotations is intentional because as we know, the USDA had already plugged in China demand into the balance sheet. And with their nonexistent purchases in the first half of the marketing year
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//Market ReportBuy the Rumour, Sell the Fact
Last month’s comments started out talking about a significant gap on the January bean chart that occurred at the end of October and set the market up for a rally throughout the month of November. That rally was largely due to the belief that China would be buying ‘significant’ amounts of U.S. soybeans. This belief was fueled by numerous meetings and ‘anno
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