Investors bet heavily on soybean price falling further

Photo: Canva
Photo: Canva

Investment funds and speculators assume that soybean prices will fall even further. For the 14th consecutive week they have expanded their sales positions. These parties assume that they can buy back the contracts at a later date at lower prices.

It is a remarkably long period in which funds and speculators are aiming for further price reductions in soy. And so far they have been right. Since mid-November, the soy price has been declining week on week. Only in mid-December there was a week with a meagre increase of less than 1%.

Over the entire period we see a price fall of more than 15%. And given that funds and speculators have only expanded their selling positions, we can assume that they see no end to this development.

Soybean harvest in South America is disappointing

This week started with a slight recovery in soy prices. This can be attributed to lower yield expectations in South America. Market and consultancy firm AgRural lowered its soybean crop estimate in Brazil by 2.4 million tons to 147.7 million tons. It remains a large harvest, but much smaller than the almost 165 million tons predicted in November last year.

About 40% of the soy in Brazil has now been harvested and yields are disappointing due to the heat wave at the beginning of this year. The harvest in Argentina is also smaller than previously anticipated.

Dragging down rapeseed prices

The price development of soy is also pulling rapeseed prices down. However, the price decline for rapeseed (May contract) is much smaller than for soy, at around 7.5% in the past fourteen weeks. But last week, rapeseed trading on the futures market in Paris was seriously affected by falling soy prices. It resulted in a price drop of 4.5% in the May contracts last week.

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