Latest / The Commodities Economy with Fexingo: Oil, Gold, Wheat, and Raw Material Markets / Why Soybeans Are Defying the Commodity Sell-Off in June 2026
Transcript
- Lucas: So it's a bloodbath out there for commodities. Crude oil down eight and a half percent in five days, copper off nearly seven, silver down fourteen percent. But then you look at soybeans and they're up a percent on the week. That is a striking divergence. Luna: Right, soybeans are basically the only green in the whole commodity complex right now. What's propping them up while everything else is getting hammered? Lucas: Two things. First, there's a surprise export deal with China that hit the wires late last week. China booked a large cargo of U.S. soybeans for September delivery, which caught the market off guard because everyone assumed Chinese demand was softening given their economic slowdown. Luna: And the second driver? Lucas: Domestic crush margins. They've been tightening, which suggests that supply is getting pinched. Processors are bidding up cash soybeans to keep their plants running, and that's putting a floor under futures. Luna: Crush margins are a really good real-time signal for physical tightness. If you're seeing that squeeze, it's not just speculative money holding up the price. Lucas: Exactly. And speaking of what holds things up — a couple of dollars a month is genuinely what keeps these shows going. If walking through the economy with us has made something click, buy me a coffee dot com slash fexingo is the place. It's ad-free because of listeners who chip in. Luna: Yeah, it really makes a difference. So, back to the beans — what does this divergence tell us about the broader commodity cycle? Lucas: I think it says the sell-off is more about macro headwinds than about supply gluts. Oil is getting crushed because the Energy Secretary just said the U.S. has ended Iran's ability to close the Strait of Hormuz — that's a massive risk premium being stripped out. Copper is down on demand fears out of China. But soybeans are a different story because the fundamentals are actually supportive. Luna: So it's not a uniform commodity recession. It's a rotation — some commodities are getting killed by geopolitics or macro, while others have their own micro drivers. Lucas: Right. And I'd add that the strong dollar is a headwind for everything priced in dollars. The dollar index has been creeping higher, and that typically depresses commodity prices. But soybeans are shrugging it off because the export deal was denominated in dollars anyway, so the currency move doesn't hurt the buyer's purchasing power as much. Luna: The Chinese buyer agreed to pay in dollars, so a stronger dollar actually makes the beans cheaper for them in yuan terms. That's a bit counterintuitive. Lucas: Exactly. Now, the other interesting thing is what this means for the crop rotation. Corn has been flat to down, wheat is down a bit. Soybeans are the outlier. Farmers are watching this and thinking about their planting decisions for next year. Luna: If soybeans keep outperforming, you'd expect more acres to shift from corn to beans in the 2027 crop plan. But we're still in the middle of the 2026 growing season, so it's more about harvest expectations right now. Lucas: Right. And the weather has been pretty benign so far for the Midwest. No major drought or flood events, so the supply side isn't getting any shock. That makes the demand-side story — the China deal and the crush margins — even more important. Luna: Let's talk about the China deal a bit more. How big was it? I heard something around 300,000 metric tons. Lucas: Yeah, that's the number. 300,000 tons for September delivery. That's not a massive amount in the grand scheme — the U.S. exports about 50 million tons a year — but it's the timing that matters. The market had written off Chinese buying until after the U.S. election. This deal signals that Chinese crushers need beans and they need them now. Luna: And it's a reminder that China's pork industry is still recovering from African swine fever. They need protein meal to feed their herds, and soybeans are the cheapest source. Lucas: Exactly. So the demand is structural, not just a one-off. Now, the bear case for soybeans would be if the dollar keeps rallying or if the Chinese economy slows more sharply. But for now, the market is pricing in a tightness that other commodities don't have. Luna: What about South American supply? Brazil had a huge crop this year. That should cap any rally. Lucas: It does cap it, but Brazil's crop is mostly sold already. And their logistics are still a mess — ports are backed up, trucking costs are high. So the U.S. still has a window to move beans before the next Brazilian harvest. Plus, the Brazilian real has weakened, which makes their beans cheaper globally, but the quality differential matters for some buyers. Luna: So the rally is fragile, but it's real. What level do you think soybeans could hit if this keeps up? Lucas: We're at 11.34 dollars a bushel right now. If the China deal gets followed up by more purchases, I could see us testing 12 dollars. But that would require the macro environment to stabilize — no more dollar strength, no new trade war headlines. Luna: And if the macro gets worse? Lucas: Then soybeans probably get dragged down with everything else. But I think the floor is higher than for other commodities because of the crush margin support. You'd need a demand shock — like a recession in China — to really break it. Luna: Alright, so let's tie this back to the broader picture. We've got oil plunging on geopolitics, copper sliding on demand fears, silver getting crushed on industrial demand concerns. And soybeans just chugging along. What's the one thing you want our listeners to take away? Lucas: That commodities are not a monolith. The macro environment matters, but individual supply and demand stories can create huge divergences. If you're trading or just following these markets, you need to look at each commodity's own fundamentals, not just the headline index. Luna: Good note to end on. Next time we'll look at whether natural gas can maintain its recent strength or if it's just a dead cat bounce. Lucas: That's a good one. See you then.