Soybean Futures in 2025/26: A Structural Downtrend Confirmed by Oversupply, Weak China Demand, and Bearish Technicals

The soybean complex is entering a critical inflection point. For investors, the 2025/26 marketing year presents a rare alignment of structural oversupply, shifting demand dynamics, and bearish technical indicators that collectively justify a strategic short position in soybean meal futures—specifically the MZMQ25 contract. This is not a fleeting correction but a confluence of forces reshaping the global soybean trade.

Global Oversupply: The U.S. Harvest and the Illusion of Abundance

The U.S. soybean harvest for 2025, while marked by a record yield of 53.6 bushels per acre, has been undermined by a sharp reduction in harvested acreage. Farmers are projected to harvest 80.1 million acres, the smallest since 2019, resulting in a 4.292 billion bushel crop—down from earlier estimates. This reduction, coupled with upward revisions to domestic usage (crushing and exports), has tightened U.S. ending stocks to 290 million bushels, with a stocks-to-use ratio of 6.7%.

Globally, the picture is no less dire. Brazil and Argentina, the world's two largest soybean producers, have flooded the market with record outputs. Brazil's 2025/26 crop remains unchanged at 176 million metric tonnes (MMT), while Argentina's production has been revised upward to 50.9 MMT. These surpluses, combined with reduced U.S. exports and weak demand from the European Union, Iran, and Vietnam, have pushed global ending stocks to 124.9 MMT—just below trade expectations. The result? A supply glut that is pricing U.S. soybean meal out of key markets.

China's Strategic Shift: The Death of the U.S. Soybean Export Model

China, the world's largest soybean importer, has structurally reduced its reliance on U.S. supplies. In April 2025 alone, U.S. soybean imports to China fell by 43.7%, with the 23% tariff from the Trump-era trade war remaining a persistent headwind. Meanwhile, Chinese traders have aggressively pivoted to Argentina and Brazil, where lower export duties and logistical advantages have made soybean meal more competitive.

Argentina, under President Javier Milei's economic reforms, has slashed export duties, enabling it to secure a 90,000-ton procurement by Chinese buyers in the first half of 2025. Brazil, though still dominant in soybean exports, faces a new rival in Argentina for China's soybean meal market. This shift is not cyclical but strategic: China is diversifying its supply chain to mitigate geopolitical risks and optimize costs.

Bearish Technicals: A Market in Retreat

The technical case for soybean meal futures is equally compelling. The MZMQ25 contract has formed a classic bearish pattern, with prices trading below the midline of Bollinger Bands and approaching the lower band—a potential trigger for further downward movement. The death cross, where the 21-day Displaced Moving Average (DMA) crossed below the 9-day DMA on June 25, 2025, has been confirmed, signaling a sustained downtrend.

The Commitments of Traders (COT) report as of August 2025 reveals a net short position of 17,000 contracts held by non-commercial traders, reflecting heightened bearish sentiment. While commercial traders remain moderately bullish, their influence is outweighed by institutional bearishness. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) further confirm weakening momentum, with soybean meal prices near nine-year lows.

The Case for a Strategic Short in MZMQ25

Given these fundamentals and technicals, a tactical short position in MZMQ25 futures is warranted. The key parameters for this trade are:
- Entry Point: $284.5 per short ton
- Stop-Loss: $297 per short ton (1.6x risk)
- Profit Target: $264.5 per short ton (1.6x reward)

This risk-reward framework is designed to capitalize on the bearish momentum while managing exposure to short-term volatility. The soybean meal market's oversupply—projected ending stocks of 475,000 short tons—and weak demand fundamentals provide a robust foundation for this trade.

Catalysts and Risks

The August 12, 2025 USDA World Agricultural Supply and Demand Estimates (WASDE) report will be a critical catalyst. Any downward revisions to U.S. export forecasts or upward adjustments to yield projections could accelerate the downtrend. Conversely, unexpected weather volatility—such as extreme heat in Brazil or Argentina—could temporarily disrupt supply chains and create short-term noise.

However, the structural forces at play—China's sourcing shift, global oversupply, and bearish technicals—far outweigh these risks. For investors, the soybean meal complex is a textbook example of a market in structural decline, offering a compelling opportunity to short with defined parameters.

Conclusion: A Downtrend Confirmed

The soybean meal market in 2025/26 is a victim of its own success. Record global production, a strategic pivot by China, and bearish technical indicators have created a perfect storm for a sustained downtrend. For those willing to navigate the volatility, MZMQ25 presents a high-conviction short case. The alignment of fundamentals and technicals is rare—this is the moment to act.