During the first trading week of 2026, the global oilseed market experienced a volatile downturn. Although China's steady procurement of U.S. soybeans alleviated some demand concerns, the massive upcoming harvest of South American soybeans signals intense competition for U.S. exports. This development signals the imminent closure of the export window.
From the perspective of crushing demand, the latest U.S. soybean crushing data exhibits the typical characteristics of “strong volume and rising inventories.” USDA data released Friday showed November soybean crush volume reached 220.5 million bushels. While below expectations and down from October, this still marks the second-highest level on record. Year-to-date crush volume has surged over 8% year-on-year, significantly exceeding the USDA's full-year growth forecast of 4.5%. However, expanding finished product inventories highlight pressure on the demand side.
By the end of November, U.S. soybean oil stocks surged to 2.164 billion pounds—an 18-month high and substantially above market expectations. Soybean meal inventories also climbed to a 12-month peak of 463,000 short tons. The accumulation of downstream product inventories indicates that high production capacity, driven by crushing margins, is encountering resistance at the end-use stage. Notably, monthly soybean oil consumption in the biofuel sector has fallen to a six-month low. This pattern of “strong crushing, rising inventories” has become the primary bearish factor driving down soybeans and their processed products this week. Notably, soybean meal and soybean oil diverged last week. Soybean meal fell to a nine-week low under dual pressure from delivery obligations and rising inventories. Soybean oil, however, showed relative resilience supported by energy market rebounds and oil-meal spread arbitrage, pushing the oilshare ratio to a recent high. Despite sustained high U.S. renewable diesel production capacity, soybean oil consumption for biofuels declined in October. This reflects downstream industries maintaining caution amid uncertain U.S. biofuel policy outlook, indicating that near-term soybean oil gains lack substantive demand expansion support.
On the export front, U.S. soybean sales to China are officially recorded at only about 6 million tons, but the market widely believes actual transactions may reach 8 to 9 million tons. Even so, overall export sales remain significantly behind last year's pace. Some institutions have lowered their U.S. soybean export projections for the current year to around 1.5 billion bushels, below the USDA's current forecast of 1.635 billion bushels. Chinese demand continues to come primarily from state-owned traders rather than commercial buyers, exerting a neutral influence on futures prices. Additionally, the recent pullback in U.S. soybean prices has attracted some non-Chinese buyers, with scattered export deals to destinations like Egypt. Meanwhile, U.S. farmers are set to receive one-time subsidy payments, which may dampen short-term selling interest, keeping domestic and export basis differentials firm.
South American weather remains the key variable for global soybean pricing. Over the next ten days, overall soil moisture conditions in Brazil's main producing regions are favorable, with rainfall reaching previously dry areas in the central-north, supporting yield potential. Some institutions have raised Brazil's soybean production forecast to 180 million tons, significantly above the USDA's current projection of 175 million tons. Argentina shows regional divergence, with persistent dry conditions in southern Buenos Aires and La Pampa provinces. Should drought persist, it could trigger new market risk premiums during the late growing season, though it currently poses no systemic threat.
Looking ahead to next week, the USDA export sales report and CFTC positions report—previously delayed due to the government shutdown—will resume their regular release schedule. This will help the market gauge the latest demand and fund dynamics. The USDA will release its highly anticipated supply and demand report the following Monday (January 12). Market participants will closely monitor whether this report adjusts U.S. soybean export demand and whether it raises South American production estimates.
Against the backdrop of speculative funds significantly reducing net long positions and technical indicators showing severe oversold conditions, soybeans could see a temporary rebound if the supply-demand report does not deliver pronounced bearish signals. However, amid medium-term pressures from expectations of a bumper South American crop and elevated product inventories, prices still have room to test lower levels. Any near-term rebound may be viewed as a technical correction rather than a trend reversal.
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