Soybeans in Chicago have seen price increases, nearing a four-month peak that was reached last week, driven by expectations for greater demand from China as the country emerges from the Lunar New Year. The market is also closely monitoring potential additional purchases hinted at by Donald Trump. Internally, the U.S. saw historic soybean milling figures for January, and oil stocks reached their highest levels since April 2023. However, the advancing South American harvest is moderating this momentum, with recent rains in Rio Grande do Sul improving crop conditions and Brazil projecting soybean production nearing 180 million tons for the 2025/26 campaign.

The anticipation of increased purchases from China has reignited optimism among traders, although some market participants are cautious about the actual impact of this demand increase. The combined soybean production from Brazil and Argentina is expected to return to record levels, further maintaining South America's strong competitive position in the global market. The dynamics between the U.S. and South America in terms of soybean export capabilities could significantly influence pricing and availability, especially as China resumes its purchasing activities.

Overall, the interplay of U.S. domestic records in soybean processing, Chinese market expectations, and the improving South American crop situation presents a complex landscape for the global soybean market. Traders will need to balance optimism around potential Chinese purchases with the reality of simultaneous record crop outputs from key South American producers, which may exert downward pressure on prices in the longer term.