Soybean Markets - On the Move Again
Written for Sevita by Bailey Elchinger, Risk Management Consultant, FCM Division of StoneX Financial Inc.
Where we’ve Been
Since harvest, soybeans have seen their share of ups and downs in the market. From the tariff war getting resolved in November, to the surprises in the January stocks report – soybeans had been stuck in a trading range for several months, even if it was a large range.
The Move
But, since our last update in mid-February, we have seen the nearby soybean complex rally nearly a dollar in price. Increased market volatility from the escalation of war activities in the Middle East has kept the market and traders on edge. March started with extreme volatility in the crude oil market, which eventually flowed into the broader commodities sector. The SK26 contract pushed to contract highs last week, while new crop prices rallied back to levels we had not seen since May 2024.
The overall rally in commodity prices, which lifted soybeans, was also fueled by the news that China was rejecting Brazilian soybean vessels for phytosanitary reasons. Cargill Brazil halted shipments last week while the exporter works to correct the shipping issues.
Additionally, the funds have pushed their overall long position to a near record level, which has supported the market. What happens when they decide to liquidate those positions? Part of the rally can also be attributed to the correlation between inflation and commodity prices. If you look at history, inflation and the commodity index are nearly 80% correlated. Traders had become increasingly concerned about oil prices and their impact on inflation. Those headlines drove interest in the commodity complex in general and brought the funds back to the bean market once again.
Where are we Headed?
This brings us to where we are today, as soybeans are seeing a massive selloff to start the week. President Trump and President Xi are expected to meet in Beijing in the coming weeks to finalize trade deals that are currently being negotiated in Paris. Just this weekend, President Trump indicated that the proposed meeting could possibly be delayed due to the conflict in Iran. The soybean market viewed this comment negatively, and thus – the market sold off. Keeping in mind that this rally began after the “very good phone call,” between the two leaders. Nearly a dollar move in the soybean market is quite exaggerated for the phone call, which did not actually produce any fundamental changes to the soybean market. Thus, it doesn’t feel like traders are shocked by this downward move as it seemed that the upwards momentum didn’t have substantial support.
Fundamentally speaking, US bean exports continue to struggle. Brazil is expected to have a record crop, once again. World soybean stocks are at record high levels. Yes, domestic crush demand continues to be very strong as margins run positive at many crushing plants. The bottom line on fundamentals is that the World saw massive crops in 2025 and is expected to again in 2026. The market does not see a need to further ration demand…. today.
What does this mean for the producer?
The recent volatility and short-term spike in prices is a vivid reminder that open/target orders work very well. Setting price goals and having orders working is extremely key. Attempting to remove emotion from grain marketing will prove beneficial, especially in fast-moving markets.
What about the consumer?
For those needing to lock in prices, we still need to look for a break in the market whenever the headlines give them to us. The soybean market is very headline risk driven at the moment, meaning things could turnaround very quickly. Look to take advantage of prices that meet margin goals, layering coverage should the market work its way lower.
Bottom line: Keep your head on a swivel, folks.
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