Soybean Futures: A Technical and Fundamental Rebound from Bearish Depths

The CBOT soybean futures market (ZSN25) has been a battleground of volatility over the past three months, marked by sharp declines and fleeting optimism. After hitting a 3-month low of 1,031.6 (equivalent to $10.317/bu) on July 7, 2025, the market is now showing signs of a rebound. This analysis explores the technical and fundamental drivers behind the recent low and the path forward for soybean prices.

Technical Indicators: A Bottom in Sight?

The July 7 plunge to 1,031.6 was a significant test of support levels. Key technical thresholds identified in prior analysis include:
- Immediate Support: $9.90–$9.95/bu (the July 7 low was just below this range).
- Long-Term Support: $9.70–$9.80/bu, which held during the 2024 lows.
- Near-Term Resistance: $10.10–$10.15/bu, a psychological barrier from recent highs.

The rebound from $10.317/bu has already pushed prices toward $10.10/bu, with volume and open interest trends suggesting renewed buyer interest. The Barchart Trading Guide's “Buy Signal” for March 2025 contracts (ZSPX25US.CM) on May 2 further supports this bullish shift. However, traders must monitor the $10.30–$10.40/bu resistance zone, which could cap gains if not breached.

Fundamental Dynamics: Supply and Demand at a Crossroads

The market's recent weakness stemmed from two primary factors: ample global supply and uncertainty over export demand.

1. The Supply Overhang

• US Crop Conditions: USDA reports noted improved U.S. soybean crop ratings in early 2025, signaling expectations of a robust harvest. Favorable Midwest weather in June further eased production concerns.
• South American Harvest: Brazil and Argentina's record 2024/25 crops flooded global markets, depressing prices.

2. Export Demand: A Fragile Recovery

• US-China Trade Tensions: While June's U.S.-China talks briefly boosted prices, unresolved issues—such as China's reluctance to purchase U.S. soybeans—have kept demand subdued.
• Alternative Buyers: Egypt, Indonesia, and Mexico stepped up purchases, with shipments hitting 389,364 MT for the week ending July 3, 2025 (up 64.5% week-over-week). This is a positive sign but insufficient to offset China's stagnation.

Domestic Demand: A Silver Lining

The USDA's March 2025 crush report showed 206.5 million bushels of soybeans processed into meal and oil, reflecting strong domestic demand. This bodes well for prices if industrial demand remains robust.

Outlook and Investment Strategy

The current rebound offers a cautious bullish bias, but risks remain:

Bullish Catalysts

• Trade Resolution: A U.S.-China trade deal could unlock Chinese demand, pushing prices above $10.40/bu.
• Weather Risks: Late-season Midwest drought or South American planting delays could tighten supply.

Bearish Pressures

• Global Supply Glut: Brazil's 2025/26 crop is expected to hit record highs, maintaining downward pressure.
• Economic Slowdowns: Weak global GDP growth could reduce demand for protein (soybean meal) and biofuels (soybean oil).

Trade Recommendations

1. Buy the Dip: Aggressive traders could enter long positions if prices hold above $10.10/bu, with a stop-loss below $9.95/bu.
2. Wait for Confirmation: Conservative investors should wait for a sustained close above $10.30/bu before committing to long positions.
3. Options Strategy: Consider buying call options with a strike price of $10.25/bu to capitalize on a breakout while limiting risk.

Conclusion

The Soybean Jul '25 futures contract (ZSN25) has navigated a treacherous three-month period, bottoming out at $10.317/bu on July 7. While technical indicators suggest a rebound is underway, fundamental risks—including global supply overhang and trade uncertainty—demand caution. Traders must balance optimism about domestic demand and potential trade breakthroughs with the reality of a saturated market. For now, the path of least resistance leans upward, but the $10.30–$10.40/bu resistance zone remains the critical test for sustained gains.

Stay vigilant, and let the charts and fundamentals guide your decisions.