CBOT soybeans closed the week up about 50¢ across most contracts, capping a strong rally built on tight old-crop stocks, record crush margins, and Chinese demand optimism. November soybeans settled at $12.40/bu, with nearby September at $12.44/bu and January 2027 at $12.52/bu. Soybeans have been the strongest of the US grains in late July.
USDA projects the 2025/26 US soybean crush at a record 2.75 billion bushels. Crush margins remain profitable across all major processing regions, driven by strong domestic demand for soybean oil (renewable diesel feedstock) and soybean meal (global protein demand). National Oilseed Processors Association (NOPA) monthly data shows member processors running at near-maximum capacity.
Old-crop ending stocks are estimated at 310 million bushels, unchanged from the June WASDE report. While not historically tight, the combination of record crush, strong export commitments, and minimal carryover flexibility means the market has limited tolerance for any supply disruption. Any weather event that threatens the 2026 crop will have an outsized price impact because there is little old-crop inventory to buffer against shortfalls.
USDA's July 20 Crop Progress report painted a cautiously optimistic picture. Soybeans were rated 66% good-to-excellent, up 1 point from the prior week, a modest improvement that surprised DTN analysts. Blooming reached 66%, 6 points ahead of both last year and the five-year average. The improvement in conditions was concentrated in Illinois and Iowa, the two largest producing states, offsetting continued declines in the Dakotas.
The next 30 days will decide yields. Soybeans enter the pod-setting stage in early August, and weather during this period has an outsized impact on final yields. AccuWeather's Chad Merrill projects average to slightly above average yields for soybeans, noting that the El Nino pattern is expected to bring favorable September rains. However, the same pattern brings mid-90s temperature stretches in late July that could stress plants entering the reproductive phase. DTN's John Baranick warned that the northern Corn Belt, including North Dakota and Minnesota, will remain drier than normal through the end of July.
China keeps providing demand support. The US-China trade agreement signed in the spring commits China to purchase 25 million metric tons of US soybeans in 2026, along with $17 billion in other agricultural products. Weekly export sales data shows China has been a consistent buyer, though at a pace that some analysts view as behind schedule. StoneX's Arlan Suderman cautioned that China has a history of falling short of its purchase commitments. Any sign China is slowing down would turn bearish fast.
South American planting will begin in September. Brazil's soybean planted area is expected to expand by 2-3% for the 2026/27 season, according to early estimates from CONAB. Argentina's planted area is also expected to increase following the normalization of farmer economics after currency adjustments. If South American production materializes as expected, it will cap the upside for US soybeans regardless of domestic supply conditions.
Soybean buyers should prepare for elevated volatility through August. The combination of low old-crop stocks (310M bu), record domestic crush, and Chinese demand commitments creates a tight balance sheet with limited error margin. Buyers with exposure through Q4 2026 should target coverage on any break below $11.80/bu November futures, which would represent a significant correction from current levels. For Q1 2027 requirements, the South American crop outlook is the key variable. If Brazilian planting area expands as expected, forward coverage beyond December may be less urgent. However, buyers should monitor two specific catalysts: (1) weekly export inspection data for signs of Chinese purchase slowdown, and (2) Midwest precipitation forecasts for the first two weeks of August, which coincide with the critical pod-setting window. Soybean oil buyers face additional complexity as renewable diesel demand continues to absorb a growing share of vegetable oil supplies.