22 January 2020
- Supply of soybeans on the global market remains loose as discussed last week (red bars < 0 indicate that supply is increasing). The divergence between our proprietary Global soybean spot supply index (displayed below) and the price of soybean is another telling sign. We continue to believe that one of the reasons behind the elevated supply is the rush to release beans from inventory holdings across the supply chain. It is worth mentioning that the surge of Brazilian supply will start in 2-3 weeks, which will cause further supply surge.
- Our short-term demand assessment for up and mid-stream demand has changed and it is now bearish. The weakness is mainly short-term, e.g. 2-4 weeks out. The weakness is identified primarily in Asia and it is presented by our proprietary metric for Downstream demand. Our medium-term assessment for global demand remains moderately positive.
- Our short-term macroeconomic view has gradually evolved from outright bearish in November and early December to moderately bullish today. One reason for the evolution of our macro view is credit, and therefore trade finance, which is flowing again. This view is contradicted by the proprietary Currency Impact Index (CII). It is evident that the ongoing price weakness is finding justification in certain currency market moves.