Soybeans

November 19, 2020

The Research Team reviews the Soybean market

 

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19 November 2020

  • Supply on the spot (2 weeks running window) continues to tighten. This is likely down to the consistent reduction of our forward supply model (2 months running window). Our attention is increasingly focused on the climatic conditions in Brazil where the trend has been largely supportive of the price rally. Dryness is what bothers us the most at this stage, but the conviction is not great.
  • Our demand view remains bullish. Our earlier assumption for demand weakness towards the end of Q4 has almost reversed. The consistent convergence of bullish spot and forward demand signals in the last 4 weeks can be a powerful price driver, the market seems to agree.
  • This surge in demand, as discussed above, is partly driven by stronger purchasing power of key end-users of soybean. More importantly is the availability of credit which continues to fuel the demand surge. Divergence between price and momentum of credit creation has so far failed to produce any weakness in prices. Interestingly, we are registering a gradual uptick in credit again

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