The global soybean market may be approaching the start of a new upside cycle in the 2026/27 season, as stronger demand and tighter inventories provide support for prices despite prospects for large crops in the US and Brazil.
In the US, the Department of Agriculture expects production of about 123 million metric tons. But rising domestic crush demand, fueled by biodiesel, is set to absorb more of that supply and keep inventories relatively tight.
“The mandatory biodiesel blend increased 61% from a year earlier,” said Luiz Roque, an analyst at Hedgepoint Global Markets.
The increase was confirmed in February and has boosted the contribution of soybean oil to US crushing margins. Oil now accounts for about 54% of the crush margin, according to Hedgepoint.
Energy demand is increasingly driving the economics of soybean processing, rather than demand for protein, Roque said. That could eventually encourage acreage expansion, a shift from the 2000s, when growing demand for soybean meal was the main driver.
Strong US domestic demand is being compounded by exports, particularly to China. Beijing committed to buying 27 million metric tons of US soybeans under an agreement between Presidents Donald Trump and Xi Jinping, a target that is within reach based on purchases so far.
The market is now watching the next Trump-Xi meeting, scheduled for Sept. 24. Roque said there is a possibility the agreed volume could be renewed or even increased from the target established in October 2025.
Together, those factors have helped support Chicago soybean futures, with contracts trading closer to $12 a bushel, up almost 20% over the past 12 months.
El Niño Adds Supply Risk
Traders are also pricing in the potential impact of El Niño on global production, Pedro Schmaedecke, a grains analyst at Datagro, said at an event on Thursday.
“Inventories are already expected to be somewhat lower, so any problem with global production could provide further support for prices,” Schmaedecke said.
The global soybean stocks-to-use ratio is expected to fall to 28% in the 2026/27 season, extending a decline that began in the previous season and bringing the measure closer to levels seen in 2021/22 and 2022/23.
Brazil Heads for Another Large Crop
Brazilian soybean acreage is expected to expand only marginally in 2026/27. Datagro forecasts an increase of 0.3%, while Hedgepoint sees growth of 0.9%.
Datagro expects Brazilian production to reach a record 185 million metric tons, compared with 183 million metric tons last season, according to Conab, Brazil’s food supply agency.
Hedgepoint is more cautious, forecasting output of 181.7 million metric tons, broadly unchanged from the previous crop as it assumes less favorable weather than in 2025/26.
El Niño-related uncertainty could nevertheless provide additional price support at a time when demand for both crushing and exports remains strong.
Global buyers remain aggressive in the Brazilian market, keeping export premiums elevated. At the port of Paranaguá, premiums are running at 100 to 150 US cents a bushel, well above the five-year average of 65 cents, according to Datagro.
Brazilian farmers have been taking advantage of favorable exchange rates and elevated Chicago prices to lock in sales for next year, said Flávio França Júnior, Datagro’s head of grains.
“We are seeing more positive numbers in Brazil,” França Júnior said. “But overall, the outlook still calls for caution, particularly because of El Niño.”
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff
