Soybean Market Volatility Amid Export Sales and Inventory Trends

The U.S. soybean market in late 2025 is navigating a complex landscape of mixed signals, with export sales, production forecasts, and inventory trends creating a tug-of-war between bearish and cautiously optimistic forces. For investors, the interplay of these factors demands a nuanced approach to short-term positioning in soybean futures.

Export Sales: A Mixed Bag of Diversification and Weak Momentum

The latest USDA soybean export sales report for the week of December 26, 2025–January 1, 2026, revealed net sales of 877,900 metric tons for the 2025/26 marketing year, a 26% decline from the prior week and 42% below the four-week average. While China remains the largest buyer (470,100 MT), its market share has plummeted from 46.7% in 2024 to 18.7% in 2025, reflecting a strategic diversification of U.S. exports to Egypt, Indonesia, and Mexico. This shift mitigates reliance on China but has not yet offset the slower-than-expected pace of sales, which remain below USDA forecasts.

Private exporters have reported additional sales of 132,000 MT to China, but these incremental gains are insufficient to reverse the broader trend of weak export momentum. The market is now pricing in a scenario where China's trade war-related import hesitancy and global competition from Brazil and Argentina could persist into early 2026.

Production and Inventory: Stability Amid Structural Pressures

The USDA's December 2025 production forecast for the 2025/26 marketing year stands at 4.3 billion bushels, a 43-million-bushel reduction from the prior month due to lower harvested acres. While this aligns with September projections, it marks a 2% decline from 2024 levels. Global production, however, is rising, with Russia and India contributing to a 800,000-tonne increase in the 2025/26 forecast to 422.5 million tonnes.

Ending stocks for the U.S. are projected to remain unchanged at 290 million bushels, a level that reflects both reduced production and sluggish exports. Off-farm storage has climbed to 225 million bushels, while on-farm holdings at 91.5 million bushels highlight the potential for post-harvest price pressure as farmers seek liquidity. These inventory dynamics suggest a market oversupplied in the near term, with limited upside for futures unless demand surges unexpectedly.

Price Volatility: A Perfect Storm of Costs and Weak Demand

Cash prices for U.S. soybeans have fallen below $11.00 per bushel in December 2025, marking a critical support level not seen since October. This decline is driven by a combination of technical chart weakness and underwhelming export sales, particularly to China. Farmers are projected to face an $89 per planted acre market loss for their 2025 crops, a third consecutive year of losses amid rising input costs. Farm production expenses are expected to hit $467.4 billion in 2025, a $12 billion increase over 2024, due to elevated land, machinery, and fertilizer prices.

The soybean crush sector has emerged as a stabilizing force, with record-breaking crush demand of 663 million bushels in Q1 2025/26, up 8.2% year-over-year. This has helped absorb some of the oversupply, but it is not a panacea. The market remains vulnerable to further price declines if China's purchasing pace does not accelerate or if global production forecasts are upwardly revised.

Strategic Entry Points for Short-Term Investors

For investors seeking to navigate this volatile environment, the key lies in identifying asymmetrical risks and opportunities. The current price action suggests a potential correction in the rally, with technical indicators pointing to oversold conditions. However, the structural headwinds-rising ending stocks, weak export demand, and elevated costs-suggest that any rebound may be short-lived.

1. Short-Term Shorts: Investors could consider shorting soybean futures at key resistance levels (e.g., $11.20–$11.50 per bushel) if prices fail to hold above the $11.00 threshold. The risk-reward profile is favorable given the likelihood of further price compression in early 2026.
2. Diversified Market Bets: The shift in export destinations to Egypt, Indonesia, and Mexico presents niche opportunities for investors to hedge against China's volatility. Monitoring private export sales reports for these regions could yield early signals of demand recovery.
3. Crush Spread Arbitrage: The robust crush demand offers a relative value opportunity. Investors might consider long positions in soybean meal futures while shorting soybean oil, capitalizing on the differential between protein and oil demand.

Conclusion

The U.S. soybean market is at a crossroads, with export diversification and crush demand providing temporary stability but unable to offset structural oversupply and weak global demand. For near-term investors, the path forward hinges on disciplined risk management and a focus on price levels that align with deteriorating fundamentals. As the USDA's December 2025 WASDE report underscores, the market is pricing in a scenario where volatility will persist until either demand surges or production adjustments materialize.