Soybean attempts to snap an eight-session slide ahead of Thursday's WASDE, but with funds adding shorts and a record crop looming, any bounce remains tactical until China demand clarity emerges.
Soybean futures (ZS) are on track to recover from an eight-session losing streak as the contract advanced in the New York session on Wednesday. However, the agricultural commodity's broader downtrend dates back to mid-April. What sparked the sustained selling pressure in soybeans?
The ZS contract has been under sustained pressure since mid-April as record South American supplies, favorable U.S. weather, subdued Chinese demand, and uncertainty surrounding biofuel policies combined to reinforce expectations of ample global stocks, prompting speculative funds to extend bearish bets.
WASDE Bounce Comes at a Pivotal Technical Juncture
Coming off 2025, a year in which soybean futures eked out a modest gain of around 3.2% amid range-bound trade, the contract entered 2026 on uncertain footing, weighed down by ample South American supplies and a stronger dollar.
The real inflection came in October 2025, when prices bottomed near the $985 level and embarked on a sharp five-month rally that carried ZSN2026 to a peak above $1,240 by March. The move was driven by a combination of tightening U.S. carryout estimates, a surge in Chinese demand optimism tied to tariff-cut speculation, and crude oil's rally lifting biofuel demand expectations.
That rally, however, ran into a wall of reality. From March onwards, the contract entered a broad consolidation before rolling over sharply in late May, pressured by favourable Corn Belt planting weather, aggressive fund liquidation, and fading China trade optimism.
At around $1,120, the contract is now testing a key horizontal support zone that capped prices through much of late 2025, making Wednesday’s pre-World Agricultural Supply and Demand Estimate (WASDE) bounce a technically significant development.
A failure to hold here opens the door toward the lower bound near $1,100, and below that the next meaningful reference is the $1,060–$1,080 area (the November 2025 consolidation area visible on the chart).
Soybean Tests Pivotal Floor
Source: TradingView
Big Crop Looms, But Biofuel Demand and Tighter Stocks Keep Bulls Alive
Estimates by the U.S. Department of Agriculture’s (USDA) Economic Research Service shows that U.S. soybean production for the marketing year 2026/27 is expected to climb by 4% to 4.4 billion bushels.
Source: USDA
On top of this, overseas soybean production is also forecast to rise by 9.2 million metric tons (MMT).
The agency also forecasts record U.S. soybean crush (2.75 billion bushels) due to favorable crush margins and strong demand for soybean oil as feedstock in biomass-based diesel production.
The demand side looks healthier with China returning as a buyer after staying off for much of 2025 amid the Trump tariff threats. In a recent podcast, StoneX Chief Commodities Economist Arlan Suderman said soybean prices are no longer primarily about weather or tariffs, but about how much China decides to buy from the U.S. for political reasons.
The strategist pointed out that the USDA projects U.S. soybean exports at 1.63 billion bushels for the new marketing year (ending on Aug. 31), implicitly assuming China buys roughly 15 MMT. But China last October committed to buy 25 MMT. The difference between buying 15 MMT and 25 MMT amounts to roughly 367 million bushels, enough to significantly tighten U.S. ending stocks, he said.
According to Suderman, this gap could determine whether soybean prices remain under pressure or enter a new bull market.
Soybean oil demand for biofuel also serves as a bullish factor for prices. ING strategists estimate that 50% of the U.S. soybean oil is used for biofuel production.The firm expects that soybean oil demand from the biofuel sector would require more than 1.4 billion bushels of soybean, which make up roughly a third of the domestic production. If the proposed biofuel policy proposal that seeks volume requirements for biomass-based diesel production by 67% in 2026 is finalized, domestic soybean oil demand will surge, in turn pushing up soybean prices.
Positioning: Funds Long But Exit Underway
CFTC data showed managed money traders remained firmly net long soybean futures as of June 2, holding 218,597 long contracts against 62,817 shorts, leaving them with a net-long position of 155,780 contracts. However, speculative sentiment deteriorated during the week, with funds cutting bullish bets by reducing long positions by 6,329 contracts while adding 22,120 shorts from May 26 levels. The increase in bearish wagers, along with a 5,022-contract rise in spreading positions, suggests investors grew more cautious amid favorable U.S. crop conditions and uncertainty over export demand, particularly from China.
WASDE Watch
Funds positioning shows that the market is clearly pricing in downside risk rather than conviction buying. Wednesday's bounce is tactical, not structural. All eyes now turn to Thursday's WASDE, where the key variables to monitor are:
- USDA's 2026/27 U.S. ending stocks estimate; Any revision above the current 310 million bushels projection would reinforce the bearish narrative, while a surprise tightening could trigger a meaningful short-covering rally.
- Export demand assumption embedded in the report; if USDA pegs U.S. soybean exports at or below 1.63 billion bushels, it implies China buying roughly 15 MMT, well short of the 25 MMT commitment made last October.
- Global supply forecast; Any upward revision will be bearish for prices.