Similar to the beginning of yesterday's session, soybean prices opened this morning with subdued activity above the support level of 1220. Over the past few weeks, major news agencies and organizations have consistently provided negative forecasts regarding Brazil's soybean crop. This sentiment was also reflected in the USDA's reduction in its Supply and Demand report released last week. However, this move indicates that the market has already started to factor in the crop damage situation in the South American country.

In the medium term, attention is shifting to the planting outlook in the US, particularly the 2024 planting acreage figures. The ratio between new crop soybean and corn prices is currently at 2.49/1, higher than the long-term average of 2.3. This suggests that soybean prices are more attractive compared to corn, potentially motivating US farmers to expand soybean planting. This is a crucial factor for long-position holders to consider. According to our assessment, until the US Prospective Plantings report is released on March 31, the medium-term trend for soybeans remains bearish.

Early this morning, the USDA released its weekly Export Inspections report, which was delayed due to a system error last night. This report will influence the market during the evening session. Specifically, soybean shipment volumes last week reached 1.26 million tons, an improvement from the previous week. However, this year's export pace is still significantly slower than the same period last year, having only achieved 47.46% of the targeted plan.

Overall, US soybean sales have been relatively sluggish over the past month, amidst an abundance of cheaper supplies from Brazil. On the demand side, Chinese imports are expected to decrease significantly in the first quarter of this year due to a reduction in hog numbers and increased inventories after importing 99.41 million tons in 2023—the highest level in three years. This factor will likely reinforce the bearish sentiment in the soybean market today.

Given that most of the news about South America's crop outlook has already been priced in, we believe that soybean prices will only see sideways movement today. However, weakening demand from China could exert short-term pressure, potentially pushing prices down to the support level of 1220.

Source: MXV