Xinhua Finance, Beijing, August 12 – The bulk commodity research team of China International Capital Corporation (CICC) pointed out in a new research report that since July, CBOT soybean prices have risen rapidly. Although they retreated after breaking previous highs, the price level has increased significantly. The market has a strong bullish sentiment, and this rally revolves around the growth in Sino-US trade volume, the strong domestic crushing demand in the United States, and the El Niño weather market. However, under the pressure of Brazil's exports and the expectation of a global surplus in new-season soybean supply and demand, the upside of prices has been continuously dragged down. Looking ahead, whether the expectation of a global soybean supply and demand surplus for the 2026/27 marketing year can be fulfilled will become the focus of market trading from the fourth quarter to the first half of next year. At present, the expectation of loose supply for the new crop (2026/27 marketing year) calculated based on historically extremely high yields is highly dependent on stable weather conditions. A downward yield space directly gives the market upward volatility, which is the biggest expectation gap for the loose supply expectation.
Combined with the current fundamentals, CICC believes that the USDA balance sheet implies two fragile assumptions: first, the historical high yield of new U.S. soybeans will not be affected by weather disturbances; second, the super-cycle El Niño will not impact the output of new-season Brazilian soybeans. Obviously, both points have a high probability of being falsified.
Meanwhile, CICC believes that for the 2026/27 marketing year, the demand side of global soybeans will provide strong support, including the marginal increase brought by bioenergy consumption and the recovery of US soybean exports amid positive expectations for Sino-US trade. Therefore, if potential risks on the supply side gradually materialize, the global loose supply expectation may be broken.
Based on a comprehensive analysis, CICC Commodities believes that the current global soybean balance sheet may underprice the supply risks in North and South America. It is expected that the price of U.S. soybeans will exhibit an asymmetric characteristic with limited downside room and sufficient upside elasticity. The overall price movement follows a complete path of "near-month fluctuations as a foundation, medium-term climate expectations lifting the central level, and long-term supply and demand tightening driving the trend market", with the core being to bet on the valuation restoration opportunity after the falsification of the loose supply-and-demand expectation. The risk factors include: the intensity of El Niño climate being lower than expected, changes in Sino-U.S. trade policies, and lower-than-expected bioenergy blending of soybean oil.
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