Soybean

January 28, 2020

The Research Team reviews the soybean market

 

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28 January 2020

  • The current supply-side situation on the global soybean market is probably best represented by the divergence between the trend of our proprietary Spot Supply Index (SSI) and the price of soybean. Our model continues to assess the supply as “elevated” for the 4th consecutive week, which is presented by the red bars in negative territory and trending below the “0” line. The medium-term prospects are not signaling immediate tightness in supply either. This view is currently supported by favorable weather conditions (drier than average) but the situation is likely to change as we enter February.
  • Our short-term demand assessment for up and mid-stream demand turned bearish last week and it is expected to remain weak until week #8. This is reflected by the spot and forward soybean demand metrics in the model, both of which are aligned. The timing of the short-term demand swings are best described by our proprietary soybean Spot Demand Index (SDI).
  • Our short-term macroeconomic view keeps evolving. This time in the direction of market-bullish conditions. Credit in late December and early January has not been flowing as smoothly as it did during November and early December and the prices felt the squeeze. This bearish view has evolved into something more constructive, as displayed in the chart below. It is evident from the divergence between price and index that the ongoing price correction is finding less and less support within the observed macro environment.

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