Soybeans

July 30, 2020

The Research Team reviews the Soybean market.

 

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30 July 2020 

  • Weather conditions remain the key swing factor for prices during this time of the year. Our proprietary climate model turned decisively bearish 4 weeks ago and it continues to suggest that stress is piling up. Please refer to the Chart of the Week for our proprietary Climatic Conditions Index (no values between weeks #1-14 of the year suggest that the USA climatic conditions are not relevant yet). Furthermore, we continue to estimate looser supply conditions along the global bean supply chain which together with the favorable weather is key factor for keeping prices in check.
  • Demand for soybean mid and downstream is weak which concerns us. The exception is the spot demand (1-2 weeks ahead) which we evaluate as “firm”. Without support at the back end of the time window (3-4 weeks ahead), this buoyancy will not last. Last week we wrote that “…the support offered by the downstream demand in key consumption regions is starting to dissipate”. This is clearly visible in our Implied Downstream Demand Index.
  • The USD continued to lose ground, which resulted in a sharply better reading of our Currency Impact Model. The pull factor from a significantly bigger market transpires in price support. Buyers of soybean are key to understanding the reaction here as they found their purchasing power increasing. This observation relates well with the data we have for spot demand as discussed above.

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