Soybeans: Monday's Weakness Amid Record Supply and Speculative Longs

Soybeans opened the week with a clear signal of supply pressure. By midday, front-month futures were down 6 to 8 cents, with the national cash price falling 7 ½ cents to $10.41 1/4. This weakness was notable because it occurred even as the market saw active buyer interest earlier that morning. USDA reported a private export sale of 264,000 MT of soybeans to China just hours before the price move. The sale shows demand is still present, but it was not enough to stem the tide.

The market is reacting to the interplay between strong sales and a looming supply overhang. While the export sale to China provided a near-term bid, the broader picture is dominated by the record Brazilian harvest. AgRural estimates the Brazil soybean crop at 16% harvested as of Thursday, ahead of the 15% pace last year. With USDA already projecting Brazil's production at 179.2 MMT, the sheer volume of beans hitting the market is creating a headwind that speculative and export demand are struggling to offset.

Volatility in the soy complex is a sign of this underlying uncertainty. While soybeans were down, soymeal futures also lost ground, and soy oil futures ticked higher. This mixed action reflects traders weighing the active sales against the massive, accelerating supply from South America. The setup is one of tension: buyers are stepping in, but the sheer scale of the Brazilian crop suggests that current demand may not be sufficient to absorb the entire new supply flush.

The Supply Overhang: Brazil's Record Harvest

The dominant force in the soybean market right now is a record supply surge from Brazil. The USDA's February report confirmed this, raising its estimate for the Brazilian crop to 180 million metric tons. This is a key reason the market briefly spiked lower after the WASDE release before bouncing. While the report itself was largely neutral for U.S. stocks, the upward revision to Brazil's production was the standout change, and it immediately weighed on sentiment.

This sheer volume is the primary factor countering demand. Global ending stocks for soybeans remain at record levels, and the addition of 180 million tons from Brazil ensures that supply will continue to outpace consumption for the foreseeable future. The market's reaction to the report-initial weakness followed by a bounce-illustrates this tension. Traders are grappling with the reality of a massive new crop hitting the market, even as they see active sales and other demand signals.

There is an emerging concern about harvest quality, as excessively wet weather in parts of Brazil could impact the crop. However, for now, the overwhelming narrative is about quantity, not quality. The scale of the Brazilian harvest is so large that it overshadows these regional risks. As one market analyst noted, the focus will continue to be on South American harvest and North American planting, with the record Brazilian crop setting the tone for the entire global supply picture.

Demand and Speculative Sentiment

The physical flow of beans is slowing, while speculative bets are building-a classic setup that can amplify price swings. Weekly export inspections for the week of February 5 came in at 1.136 million metric tons, a drop of 13.8% from the prior week and 3.5% below the same period last year. This marks a clear deceleration in the physical shipments that support prices. The shortfall is even more pronounced when viewed year-to-date. Total shipments for the 2025/26 marketing year now stand at 23.136 million metric tons, which is still 34.4% below the same period last year. This persistent demand shortfall suggests that even with active sales like the recent one to China, the underlying pace of global consumption is lagging behind the record supply surge.

Yet, in the futures market, a different story is unfolding. Despite the price weakness, speculative interest is increasing. The managed money net long position in soybeans rose by 11,511 contracts last week, pushing the total to 28,832 contracts. This build in longs is notable because it occurs against a backdrop of physical demand slowing and a massive supply overhang. It indicates that traders are positioning for a potential rebound, perhaps betting on a seasonal demand pickup or a supply disruption that hasn't yet materialized.

This divergence between physical demand and speculative positioning creates a vulnerable setup. The record Brazilian crop provides a fundamental headwind, but the growing speculative longs act as a potential bid that could limit downside or spark rallies if sentiment shifts. The market is caught between these two forces: the tangible slowdown in shipments and the betting that demand will eventually catch up. The upcoming monthly WASDE report will be a key test, as any adjustment to global supply or demand forecasts could quickly validate or invalidate the current speculative bets.

U.S. Balance and Near-Term Catalysts

The immediate U.S. supply picture offers no relief. The USDA left U.S. soybean ending stocks unchanged at 350 million bushels in its February report, a clear signal that domestic supply and demand are in a stable, if unexciting, equilibrium. There is no imminent shortage, but there is also no surplus to act as a price floor. This stability in the U.S. balance sheet, while a relief from volatility, does little to counter the overwhelming global supply overhang from Brazil.

The next major test arrives with the USDA's monthly WASDE report on Tuesday. Analysts expect this release to show little change to the U.S. stocks number, likely holding near the 348 million bushel estimate from last month. The real focus will be on the global numbers, particularly any further adjustments to Brazil's record production. The market will be watching for any hint that the massive Brazilian crop estimate of 180 million tons might be revised, which would directly impact global ending stocks and the fundamental supply equation.

A key data point to monitor this Thursday is Brazil's CONAB harvest update. The government agency's latest outlook, due this week, will provide a fresh snapshot of the harvest's progress and any changes to the record production estimate. While the USDA has already raised its Brazil figure, CONAB's numbers often run higher and can serve as a reality check on the pace and quality of the harvest. Excessively wet weather in parts of Brazil could impact quality, and any shift in CONAB's forecast could introduce new volatility into the market.

For now, the U.S. balance is a neutral factor. The real catalysts are external: the upcoming WASDE report for a global supply update and the CONAB harvest data for a South American reality check. The market's current weakness, despite active sales, suggests that traders are looking past the U.S. numbers and focusing on the record Brazilian crop. Any confirmation that this supply surge is even larger than expected would likely reinforce the downtrend, while a quality-related cut could spark a short-term rally.