Larger US soybean crop fails to ease tight market balance

Despite a 6.4% year-on-year increase in US soybean production, ending stocks for the MY 2026/27 could decline by nearly 5%. According to StoneX analysts, the larger harvest is not creating a supply surplus due to strong demand from the crushing industry and renewed Chinese purchases. This is keeping the US soybean balance sheet tight despite the seasonal increase in supplies.

The main factor behind declining stocks is the expansion of domestic soybean crushing, which is expected to increase by around 4% this season. Additional demand is coming from the biofuel industry, which is increasing its use of soybean oil as a feedstock for biodiesel production. According to StoneX Brazil Senior Market Intelligence Analyst Isabela Garcia, high crude oil prices are also supporting the soybean oil market, making its use in biofuel production more attractive.

Meanwhile, renewed soybean purchases by China are playing an important role in supporting the US market. Stronger export and domestic demand are absorbing the additional production resulting from expanded planting areas. Against this backdrop, the US Department of Agriculture (USDA) has been gradually revising its soybean ending stocks estimates downward, indicating a smaller buffer against further increases in demand.

On the Chicago futures market, the larger harvest and increased arrivals of new-crop soybeans are creating seasonal pressure on prices, limiting their upside potential. However, strong demand from crushers and Chinese importers is preventing significant price declines.

According to StoneX, the combination of a large harvest and steady demand is providing relatively firm price support for soybeans. Further market developments will largely depend on crushing rates, biofuel demand, and Chinese import volumes. If consumption continues to grow, even a large US soybean crop may prove insufficient to rebuild stocks, supporting prices for soybeans and soybean products.

Tags: soybean, oilseeds, USA