The main contract for CBOT soybeans closed higher last week, gaining 1% to settle firmly above the $12 per bushel mark. This move was supported by a significant return of export demand, with the U.S. Department of Agriculture announcing consecutive large daily sales to China. The weekly net export sales volume surged to 1.96 million metric tons, a more than threefold increase from the previous week's 460,000 tons.

Domestic crushing activity also provided strong support. NOPA data showed June soybean crush reached 214.34 million bushels, hitting a three-month high and exceeding market expectations. CBOT soybean oil futures, buoyed by a 15% weekly surge in crude oil prices, climbed to a six-week high, becoming a standout in the oilseed complex. However, forecasts suggesting moderating heat in the Midwest next week have capped further expansion of weather-related price premiums. The market's primary focus is shifting from a "weather premium" narrative to a dynamic interplay between "demand recovery" and ongoing "weather uncertainty."

Key Contracts Reclaim the $12 Level

For the week ending July 17, the primary November soybean contract on the Chicago Board of Trade settled at $12.03 per bushel, marking a 1.0% weekly gain and reclaiming the psychologically important $12 level. The physical market also strengthened, with July-shipment U.S. Gulf soybean offers quoted at $13.035 per bushel, up 1.6% for the week.

Soybean oil was a particularly strong performer. The December soybean oil contract closed at 72.43 cents per pound, rallying 5.0% for the week to reach a six-week peak, largely propelled by the sharp rise in international crude oil prices. In contrast, soybean meal showed weakness, with the December contract edging down 0.1% to $318.5 per short ton.

In related international markets, the November rapeseed contract on Euronext gained 4.2% to €550.00 per metric ton. The November canola contract in Canada rose 2.2% to C$794.5 per metric ton. Argentina's up-river soybean FOB offer increased 2.3% to $455 per metric ton.

Broad-Based Demand Recovery: China's Return and Export Surge

The most significant bullish signal this week stemmed from a marked improvement in export demand, highlighted by the return of Chinese buying interest. The U.S. Department of Agriculture issued consecutive daily soybean sales announcements: a sale of 136,000 tons to China on Monday, followed by another sale of 340,000 tons of new-crop soybeans to China on Friday, alongside sales of 110,000 tons to unknown destinations and 257,000 tons to Mexico. This flurry of sales announcements significantly boosted market sentiment.

The weekly export sales report further confirmed this positive trend. For the week ending July 9, net U.S. soybean export sales reached 1.96 million metric tons (including 190,000 tons of old-crop and 1.77 million tons of new-crop), a more than threefold jump from the previous week's 460,000 tons. Cumulative net sales for the marketing year-to-date stand at 41.32 million tons, which is 18.4% below the year-ago pace. However, this is close to the USDA's full-year export forecast, which projects a 19.7% year-on-year decline.

Chinese customs data corroborated the robust import demand. China's soybean imports in June hit a monthly record of 13.55 million metric tons, up approximately 10.5% year-on-year. First-half cumulative imports reached 50.15 million tons, exceeding the year-earlier level and indicating sustained strong domestic crushing demand.

Crush Data Tops Expectations, Plunging Soy Oil Stocks Ignite Market

Domestic crushing demand also injected upward momentum. Data from the National Oilseed Processors Association showed member firms crushed 214.34 million bushels of soybeans in June, reaching a three-month high. This represented a 2.7% increase from May and a significant 15.7% year-on-year rise, comfortably surpassing market expectations.

Crush margins remained elevated. Old-crop crush margins were around $3.23 per bushel, with new-crop margins near $2.94, both at relatively high levels for recent years. The startup of new processing facilities and sustained growth in biodiesel demand provide structural support for these margins.

A sharp drawdown in soybean oil inventories further amplified bullish sentiment. NOPA reported that U.S. soybean oil stocks at the end of June fell to 1.501 billion pounds, down 15.6% from May and marking an eight-month low. U.S. Environmental Protection Agency data showed D4 biodiesel RIN generation in June reached 839 million, up from 736 million in May, reflecting active renewable fuel demand. Rising international crude oil prices, which gained 15.9% for the week amid Middle East tensions, and stronger diesel prices have improved U.S. biodiesel production margins, further lifting expectations for soybean oil demand.

The soybean oil/soybean meal spread trade was a notable feature of fund flows this week, with money clearly favoring buying soybean oil and selling soybean meal, which limited gains in the meal market. However, Argentina's crushing industry is grappling with insufficient domestic soybean supplies, forcing some processors to import Paraguayan beans to maintain operations, which may constrain the growth of South American soybean meal supplies.

Weather Dynamics: Heat Concerns and Rain Forecasts in Tug-of-War

Weather remained a central narrative for price movements. In mid-July, high temperatures across the U.S. Northern Plains and northwestern soybean belt, with some areas exceeding 95 degrees Fahrenheit, sparked concerns over soil moisture depletion and yield potential. This was a key driver in pushing prices back above $12.

The USDA's weekly Crop Progress report showed the U.S. soybean good-to-excellent rating at 65% as of July 12, up 1 percentage point from the prior week but below last year's 70%. Conditions varied by state, with declines noted in Illinois, Missouri, and South Dakota, while improvements were seen in Kansas, Michigan, and Ohio. The Drought Monitor report indicated 18% of the soybean area was in drought as of July 14, down 1% from the prior week but significantly higher than the 7% seen a year ago. Following a week of intense heat across the Midwest, some analysts anticipate the USDA may lower its good-to-excellent ratings for soybeans and corn in the next update.

Regarding crop development, 50% of the soybean crop was blooming and 19% was setting pods, both ahead of the five-year average, indicating a generally fast pace. However, yield risks in the drought-affected northwestern regions are not yet fully resolved.

The latest weather forecasts suggest the Midwest heat may moderate this week, with chances for rain in eastern areas. This tempered further expansion of weather premiums toward the week's end. Nonetheless, the market remains highly alert to August, a critical window for pod setting and yield determination in U.S. soybeans. Should weather conditions deteriorate again, prices retain potential for further upside.

South American Supply and Geopolitical Factors

In South America, consultancy Safras & Mercado projected on Friday that Brazil's 2026/27 soybean planted area will reach 49.1 million hectares, a 1.2% year-on-year increase, with production expected to climb to a new record of 180.1 million metric tons. Brazil's expanding production capacity continues to be a major source of global supply growth. July Brazilian soybean exports are estimated at 13.76 million tons, above previous forecasts, maintaining competitive pressure on U.S. exports.

On the geopolitical front, escalating conflict between Russia and Ukraine, coupled with tensions in the Strait of Hormuz, has increased risk premiums for global energy and grain transportation. Uncertainty surrounding Black Sea grain exports may prompt international buyers to increase reliance on American agricultural supplies, potentially indirectly improving the export outlook for U.S. soybeans.

Fund Positioning and Market Outlook

Regarding positioning, speculative funds held a net long position of 72,688 contracts in soybean futures and options as of July 14, an increase of 4,009 contracts, or about 6%, from the previous week, reflecting a gradual improvement in speculative sentiment.

Looking ahead, the CBOT soybean market is expected to maintain a firm, albeit potentially choppy, tone. U.S. weather will remain the core pricing variable. Should signals of high temperatures and drought emerge in August, the market will reprice yield risks, potentially driving prices higher. Conversely, if weather conditions continue to improve, the market may revert to a pressure dynamic based on expectations of a large crop. On the demand side, the sustainability of recent procurement will be a key variable determining whether prices can effectively break through previous highs.