FX.co ★ Soybeans Retreat as Market Eyes China Target

Soybean futures recently settled around $11.2 per bushel, pulling back from a peak of $11.6 achieved on November 18—this was a high not seen in 16 months. Factors fueling this decline include skepticism regarding China's capacity to fulfill its ambitious 12-million-ton procurement goal. Although the U.S. Department of Agriculture disclosed significant sales of 1.584 million tons to China last week—the most substantial weekly figure since November 2023—China's purchasing pace must quicken to hit its target. The situation is compounded by robust Chinese stockpiles, unfavorable crushing margins, and a competitive disadvantage for U.S. soybeans compared to Brazilian counterparts, all contributing to a murky outlook for future transactions. As reported on November 16, the U.S. has harvested 95% of its soybean crop, slightly behind last year’s 98% and the five-year norm of 96%. Meanwhile, in Brazil, some regions are experiencing drought conditions, prompting Safras to cut its production forecast. Despite this, Brazilian output is poised for a record, with a remarkable 70% of planting completed—surpassing historical averages.