- Bearish factors
- Global production 24/25 above consumption, according to the USDA;
- Concerns over the pace of global demand;
- Estimate of record production for the Brazilian 24/25 crop;
- Improvement in crop conditions in Argentina;
- China taxes US soybeans at 10%;
- China taxes canola and Canadian derivatives.
- Bullish factors
- New incentive measures adopted by the Chinese government;
- Crop in Rio Grande do Sul heavily impacted by weather;
- Estimate of a decline in acreage for the US 25/26 crop;
- Loss of potential in the Argentine crop;
- Possible agreement between the fossil fuel and biofuels sectors in the USA.
Soybean quotes in Chicago ended last week higher, after having reached USD 10.00 per bushel during the period. The May contract closed on Friday (the 28th) at 1023 cents per bushel, up 1.3% for the week.
The market is anticipating the release of US planting intentions data today, with expectations of a decline in soybean acreage, as the oilseed loses ground to corn, given that the cereal’s price performance appears more favorable—with more significant gains than since last year. Furthermore, doubts about the country’s biofuels programs persist, at a time when crushing margins remain weak and oil prices are not sufficient to compensate for the meal’s share in revenue.
In recent years, investments in the US renewable diesel sector have been very high, along with an increase in soybean crushing capacity. However, biofuels programs are fundamental to enabling this segment and uncertainties with the start of the new US administration have grown significantly. Even so, last week news emerged that the Trump administration is seeking an agreement between the oil and biofuels industries to define the next phase of US renewable fuel policy and avoid political conflicts. Among the main topics discussed were the new mandatory biofuels blending volumes, with proposals to increase renewable diesel and biodiesel. There is the possibility of increasing the RVOs (Renewable Volume Obligation) for the D4 category, related to biodiesel and HVO, to a volume between 4.75 and 5.5 million gallons—levels higher than those previously agreed. The latest EPA decision established moderate highs for targets until 2025, which reached 3.35 billion gallons. This news supported oil prices and soybean prices at the end of the week, but nothing has been confirmed yet.
It is also worth noting that exports are on the radar. With the recent increase in premiums in Brazil, the competitiveness of the US product has improved, but Brazilian soybean sales remain predominant at this time of abundant availability of the oilseed here, with harvest having exceeded 80%, according to a StoneX survey. Brazilian soybean exports surpassed 10 million tonnes as of March 21, based on preliminary official data.
Meanwhile, US export sales in the week ending on 03/20 reached 338.5 thousand tonnes, bringing the cumulative total to 45.76 million, maintaining the pace necessary to reach and even exceed the USDA’s export estimate for the 24/25 cycle, at 49.67 million tonnes. For now, there have been no major changes in US export patterns, after China imposed a 10% tariff on US soybeans—especially since the Asian country had already been reducing its purchases of US soybeans in recent years. Even so, last week Trump stated during a video call that he might consider reducing the tariffs imposed on Chinese products, with one condition being the sale of the TikTok app, which was received with optimism by the soybean market, although nothing has been confirmed.
In Argentina, the Buenos Aires Grain Exchange highlighted the occurrence of rains in the western part of the country's agricultural belt, including part of the northern areas that had been suffering from drought. Crop conditions remained virtually stable last week with the percentage of poor/very poor conditions holding at 25%. Consequently, the soybean 24/25 production estimate for the country remains at 48.6 million tons, according to the institution.
This week, major attention is focused on the US planting intentions report for the 25/26 crop, which will be released today at 1:00 PM Brasília time, along with the country's stock position as of 03/01—an indicator of the consumption of the 24/25 crop.
Tomorrow, StoneX will release its update for the Brazilian 24/25 crop.
