US Crop Weather and El Niño Raise Soybean Market Uncertainty in Third Quarter
The global soybean balance remains comfortable, supported by record Brazilian production and strong South American supplies. However, US yield prospects, El Niño, biofuel demand and the execution of Chinese purchase commitments could increase price volatility through September.
US yields become the main price driver
The global soybean market entered the third quarter of 2026 with relatively comfortable supplies, but uncertainty surrounding the 2026/27 US crop could increase price volatility through the end of September. According to Notícias Agrícolas, citing StoneX's 36th Quarterly Commodity Outlook, crop development in the United States, the strengthening of El Niño, biofuel feedstock demand and trade relations between China and the United States will be the main issues for market participants.
The second quarter was shaped by pressure from Brazil's record crop and favorable early prospects for US production. Attention has now shifted to the critical development period for the American crop, when weather and field conditions will determine its yield potential. StoneX market intelligence specialist Ana Luiza Lodi said the US yield outlook would remain the principal factor in soybean price formation during the quarter.
US planting was completed faster than the historical average, while the soybean area expanded. StoneX attributed the increase to soybeans' improved competitiveness against corn amid high costs for nitrogen fertilizer and following a record US corn crop in the previous season. The larger area supports production prospects, but final output will depend on yields.
El Niño and August WASDE add weather risk
NOAA officially confirmed El Niño in June, and the phenomenon could strengthen over the coming months. International projections cited in the report indicate a high probability that it will reach strong intensity by the end of the year. El Niño has historically reduced the risk of prolonged summer drought in the United States, which can benefit crops, but the expected strength of the current event adds uncertainty rather than removing weather risk.
The August World Agricultural Supply and Demand Estimates report will be a key market event because it will contain the first official US yield estimates based on field surveys with producers. Any material change in expected productivity could affect prices, crushing margins and purchasing decisions across the soybean, meal and oil markets.
Demand is also expanding. StoneX said US crushing margins remain historically attractive, supported by higher biofuel mandates for 2026 and 2027, stronger sector-related credits and increased international energy prices. Crushing remains the main source of growth in US soybean demand, while the biofuel industry's expansion is giving soybean oil greater weight in the global balance.
Brazilian record supply keeps the balance comfortable
China-US trade is another source of uncertainty. A commitment to purchase US soybeans remains in force, but the market continues to question how fully the negotiated volumes will be delivered. Broader commitments covering US agricultural products are also being monitored. If the agreed purchases occur, the US supply-and-demand balance could become tighter than current projections suggest.
South American supplies provide a substantial buffer. StoneX estimates that Brazil harvested a record 182.1 million tonnes in 2025/26, supported by acreage expansion and good yields across most producing regions. Brazilian soybean exports are projected at approximately 113 million tonnes in 2026. Competitive supplies allow Brazil to maintain large shipments even during the period when the United States traditionally gains international market share.
Brazilian domestic processing is also firm as biodiesel production and favorable margins encourage crushing. In Argentina, production exceeded initial expectations, further improving global availability. The country continues to direct much of its soybean supply into industrial processing and remains an important exporter of soybean meal and oil. Supplies are therefore ample for now, but US yields, El Niño, Chinese purchasing and South American planting decisions could quickly change the outlook for producers, processors and traders.
