Soybeans caught between crude oil rally and record South American supply

Soybean prices are drawing short‑term support from surging crude oil, tighter soyoil stocks and fresh US export sales, but looming record Brazilian and US crops plus only moderate speculative length are likely to limit sustained rallies. The latest move higher in Euronext and CBOT soybeans has been driven mainly by energy markets and oilseed complex dynamics. A sharp rise in crude oil on fears of a broader US–Iran conflict has lifted oilseed and vegetable oil prices, while logistical issues in Black Sea sunflower oil exports and concerns over EU rapeseed yields underpin the broader oilseed complex. At the same time, strong US soybean export bookings for 2026/27 and tightening US soyoil stocks linked to biofuel demand are providing additional support. However, first estimates point to another record soybean crop in Brazil in 2026/27 and solid US output, suggesting that weather and geopolitics, rather than outright scarcity, will drive price volatility in the coming months.

Prices

The recent price strength in soybeans is closely tied to the oilseed and energy complex. Rapeseed and soybeans on Euronext and CBOT moved higher after crude oil closed at a five‑week high, as markets priced in the risk that escalating US–Iran tensions could disrupt oil flows through the Strait of Hormuz and lift energy‑linked feedstock demand.

Domestically quoted physical soybean offers show a mixed but generally firm picture in EUR terms. Using an indicative 1.00 USD/EUR for simplicity, current FOB and CPT values translate approximately as follows:

Overall, international benchmarks are firmer on the week but still sit within the broader trading ranges of recent months, with physical markets reflecting relatively tight nearby premiums in Asia and India versus more competitive Black Sea and US Gulf origins.

Supply & Demand

On the demand side, US export activity has turned more supportive. Private sales reported for 340,000 tonnes of soybeans to China, 257,000 tonnes to Mexico and 110,000 tonnes to unknown destinations for 2026/27 underline that forward buying interest is returning, particularly from key Asian and North American importers. These new bookings help stabilize the US export balance sheet and support CBOT futures.

Soyoil is emerging as a second major demand pillar. Futures at the CBOT have rallied on declining stocks and expectations of stronger domestic use, as new US tariffs on Brazilian imports are anticipated to curb flows of beef tallow, a key competing biodiesel feedstock. While some recent US tariff measures have carved out exemptions for headline agricultural products such as coffee and beef, by leaving animal fats exposed they indirectly enhance the relative competitiveness of soyoil in the biofuel sector.

In the broader oilseed complex, ongoing problems in Black Sea sunflower oil exports from Russia and Ukraine are encouraging a shift in vegetable oil demand towards rapeseed oil, and by extension support soy‑based oils. European rapeseed prices have reached their highest levels in more than 15 months, as traders closely monitor heat‑ and drought‑affected crops in France, Germany and Poland. Concerns over rapeseed availability keep crushers and refiners attentive to alternative oilseed supplies, including soybeans.

Fundamentals

On the supply side, Brazil remains central to the medium‑term outlook. Local consultancy Safras & Mercado projects the 2026/27 Brazilian soybean harvest at around 180.1 million tonnes, about 1.8 million tonnes above the previous season, implying continued growth in global soybean availability. Sowing is set to begin in September, with planted area expected to expand by roughly 1.2% year‑on‑year, although yields could be constrained if El Niño brings below‑normal rainfall to central production regions.

Official Brazilian statistics also point to record output levels. The latest IBGE update pegs Brazil’s current‑cycle soybean crop at about 174.8 million tonnes, up more than 5% from last year and marking a new record, reinforcing the abundant global supply backdrop even before the next Safras‑projected expansion. Meanwhile, recent USDA outlooks foresee record US soybean production around 4.5 billion bushels for 2026/27 and ending stocks near 310 million bushels, suggesting comfortable – though not excessive – US inventories.

Speculative positioning is constructive but far from extreme. According to the latest CFTC report for the week to 14 July, managed‑money traders increased their net‑long exposure in soybean futures and options only marginally, by about 4,000 contracts, to roughly 72,700 contracts. This modest build in length indicates growing, but still cautious, investor confidence in further price gains and leaves room for additional fund buying if bullish catalysts – such as weather problems in Brazil or further escalation in the Middle East – materialize.

Weather & Regional Outlook

Weather risks are currently concentrated in two key regions. In the EU, heat and dryness have already stressed rapeseed crops in France, Germany and Poland, with yield losses expected but not yet fully quantifiable. This raises the prospect of stronger EU demand for imported oilseeds and vegetable oils later in the season if domestic supplies disappoint.

In South America, El Niño patterns are expected to bring drier‑than‑normal conditions to parts of central Brazil during the upcoming planting and early vegetative phases of the 2026/27 soybean crop. While it is too early to quantify yield impacts, any persistent rainfall deficits during planting (September–October) or pod‑setting stages could prevent Brazil from realizing the full potential of the projected 180‑million‑tonne harvest and would quickly be priced into global markets through risk premiums.

Trading Outlook (1–3 months)

• Bias: Mildly bullish in the short term on energy‑ and biofuel‑driven support, but medium‑term capped by record South American and US supply prospects.
• Producers: Consider layering in incremental hedges on price strength, especially if CBOT rallies further on crude‑driven moves, while retaining some upside exposure in case Brazilian weather disappoints.
• Importers / Crushers: Use current rallies to secure a share of nearby coverage but maintain flexibility for additional buying on setbacks, given the likelihood of ample Brazilian and US supplies.
• Speculators: Modest net‑longs remain justified; look to add on weather scares or geopolitical escalations in energy markets, with tight stops in case large‑crop expectations in Brazil and the US are confirmed.

3‑Day Price Indication

• CBOT soybeans (futures, EUR‑equivalent): Slight upside bias, tracking crude oil strength and follow‑through from recent export sales, but vulnerable to profit‑taking after the latest rally.
• EU oilseed complex (rapeseed/soybeans, EUR): Steady to firmer, supported by rapeseed weather concerns and tight vegetable oil sentiment; volatility likely around energy headlines.
• Black Sea and US physical markets (FOB/CPT, EUR): Mostly stable with a mild firming tone, as buyers cautiously rebuild coverage ahead of South American planting and monitor tariff‑related shifts in biofuel feedstock demand.