Soybean prices rise after Trump-Xi talk, but fundamentals limit speculative gains
President Trump said that during a phone call with Chinese President Xi yesterday, he asked China to increase its commitment to purchase American soybeans for the current season to 20 million tons, compared to the previously announced 12 million tons.
This led to a rapid increase in quotes, and March soybean futures in Chicago rose by 4.9% in the morning, but then fell slightly, closing the day up 2.5% to $401/t (+2.5% for the month).
In the 2025/26 MY (as of January 29), soybean exports from the US amounted to 22 million tons, which is 35.7% lower than last year's pace, but the gap has narrowed by almost 10% since the beginning of January.
The rise in quotes was helped by a sharp increase in oil prices, as the US threatened to pull out of the talks with Iran over its demands to change the venue and format of the talks scheduled for Friday in Turkey. But later it was reported that the US had agreed to move the talks to Oman, as requested by Iran, which caused oil quotes to fall.
Increased soybean production forecasts in Brazil and rainfall forecasts in Argentina are also putting pressure on soybean prices.
In Argentina, as of January 30, 96.2% of the area has been sown with soybeans, with only 75-80% of the area in the northern regions, as excessive soil moisture in these areas delays sowing. The weather has been very dry last week, with only light local rains in western La Pampa. Over the weekend, precipitation increased in the southwest, and rain is forecast in western Cordoba, La Pampa and the southwestern part of Buenos Aires during the days. At the same time, the central and eastern regions continue to experience drought, which increases stress for crops.
According to the Argentine Grain Exchange, 13% of soybean crops are in poor condition, 34% in fair condition, and 53% in good or excellent condition (61% last week). Soil moisture is insufficient in 32% of soybean crops, and sufficient or optimal in 67% (73% last week). Due to the lack of precipitation and reduced soil moisture, the soybean harvest forecast for the 2025/26 MY has been reduced by 1 million tons to 48 million tons.
The soybean market will remain influenced by news on soybean harvests from South America, and from March, the pressure will increase due to planting forecasts in the US, but the main factor will be China's ability to absorb a large supply of cheap soybeans from Brazil and expensive ones from the US.
According to the Nos Aires grain exchange, 47% of soybean crops in Argentina are in good or excellent condition (53% last year).
Crude oil and gasoline prices rose sharply on Wednesday, with gasoline hitting a 2.5-month high. Crude oil prices on Wednesday reversed earlier losses and rose on news that upcoming nuclear talks between the United States and Iran have reached a deadlock, raising the risk of escalation between the two countries. Crude oil prices also received support from an upbeat weekly report from the EIA, which showed that crude supplies fell more than expected.
The rise in crude oil prices was fueled by Axios' report on the possibility of US military strikes on Iran, which could disrupt key shipping lanes, as well as Iran's production of 3.3 million barrels of crude oil per day.
After Trump's announcement, soybean quotes rose by 25-27 ½ cents, and futures for the new crop rose by 4-11 ¼ cents.
The average price for cash soybeans cmdtyView rose 26 1/4 cents to $10.27 3/4. Soybean meal futures rose $1.3-$4.6/ton, and soybean oil futures rose 101-117 points.
Traders expect the USDA's export sales report, due out on Thursday, to show soybean sales of 0.4-1.6 million tonnes (for the week of January 29), soybean meal of 250-500 thousand tonnes, and soybean oil of up to 25 thousand tonnes.
