26 November 2019
- Supply of soybeans on the global market, as picked up by our proprietary systematic fundamental model, appears to be the strongest argument in favor of the weaker prices. Furthermore, the impact of supply on the overall soybean market price formation has increased strongly from a minimum of 24% during week #41 to 49% this week. The convergence of the green bars towards the zero line indicates pick up in supply growth for a number of weeks.
- Our short-term demand assessment for up and mid-stream demand has improved marginally since our last publication. We continue to see firm demand in Asia which we expect to hold well into December. Therefore, it is plausible to project that the soybean price will find support as the signals from better demand in December finally filter through the market.
- Our short-term macroeconomic view has also improved since our last publication. Credit, and therefore trade finance, has not been flowing as smoothly as it did during weeks #30-40. The result was the end of the price rally and subsequent decline during weeks #43-48. Our proprietary model continues to identify positive changes, most notably in the improved lending conditions in China. Signals from the FX markets do not support any immediate positive price shock. This is displayed with our Currency Impact Model which fails to identify any meaningful pick-up in Purchasing power of the soybean buyers.