Fundamentally Speaking

It's been a long ride down for January soybean futures since peaking at $13.50 per bushel two months ago, which was close to a three year high.

Friday's action brought prices as low as $11.84, right near the summer low as a long-term uptrend line extending back to first of the year appears to be broken.

One reason is expectations for larger supplies as the trade estimates for the November crop production report due out Tuesday show increases from what are already projected as a record yield and production figure.

A look at the average guess indicates some of the larger supplies will be offset by higher demand, mostly in the form of exports, even with the likelihood that China will in fact purchase at least 25 million metric tons (mmt) of U.S. soybeans this marketing year, which has already been incorporated into the balance sheet.

The prospect of no additional Sino purchases and what has been a favorable start to the South American growing season has resulted in mass long liquidation by the funds that has exacerbated the two-month slide in values.

One bright spot has been a robust pace of overseas sales so far this marketing year as reflected in this graphic that shows U.S. soybean sales and shipments as of the fourth week of October as a percent of the USDA's October WASDE export projection which is plotted on the left-hand axis.

Reported on the right-hand axis the percent change in U.S. soybean exports from that October report to the final WASDE projection for the year going back to 2000.

Total sales at the end of last month were 1.057 billion bushels (bb), the largest in five years and 62.4% of the last USDA export projection of 1.695 bb, the second largest percent in that record since the 2014.15 marketing year.

The percent shipped at 20.6% or 349 million bushels (mb) is the second highest since the 2016/17 season.

This is quite a bit different than a year ago when sales the fourth week of October were just 35.3% of the October 2025 WASDE projection of 1.660 bb.

Final sales a year ago were just 1.515 bb, down 8.7% from the WASDE projection, the second largest drop since the 2005/06 marketing year.

Making the case for a final export figure above the current 1.695 bb is the fact that since 2000, there have been nine years where U.S. soybean sales as of the fourth week of October were 60% or higher of the USDA's October WASDE export projection and all those years saw the final U.S. exports higher than the October projection ranging from 1.9 to 16.2% better.

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