Prices of Soybean

No 1. Soybean

The price of Soybean 1 from DCE fluctuated on the week ending on 24 Feb. From Heilongjiang Province, the reserve price of soybean storage has not been adjusted, the surplus grain in the northeast region is sufficient and the source of low-protein grain is the primary focus. The government’s documents on Soybean No 1 continue to encourage the expansion of soybean and oil crops, while the international market has also seen increased harvesting from Brazil and the rise of US Soybeans. Nonetheless, the market remains not driven enough.

Considering that the weather in the later periods will not be conducive to soybean storage, farmers will only speed up grain sales when spring ploughing season arrives, and traders are not optimistic about the future markets. It is expected that the first phase of the bean price will be volatile.

Soybean Meal

The main force of U.S. beans is running strong at around 1520 cents. Argentina’s production areas continue to be affected by high temperatures and low rain. Brazil’s soybean harvest rate was 15.4% as of Feb.11, and exports in the first two weeks of February were only 1.301 million metric ton (MT), significantly lagging in comparison to the past year.

However, the pace of harvests and exports is accelerating, and with-it, Brazil’s FOB has continued to decline into a negative value. Brazil’s return to the market as a major exporter will be detrimental to U.S. bean exports, with 510,000 tonnes of new orders for the 22/23 year, which ended on Feb 9. This was also the lowest level in the market year for the second week in a row.

Last week, NOPA released January’s crush data, and its members January’s soybean crush fell short of market expectations. The market continues to focus on the situations in South America, and this week, the USDA Agricultural Outlook Forum will release the 23/24 US balance sheet forecast which is expected to remain strong.  

In China, due to the shutdown of some oil mills, the crush of soybeans in oil mills fell to 1.7022 million tons last week, and the steel expected 1.5728 million in the week ending 24 February. Due to the low profits from the planting, the off-season of soybean meal consumption after the holiday, and the availability of substitutes caused by the high price, soybean meal delivery remains average while oil mill soybean inventory rose to 604,900 tons in the week ending on February 10.

Similarly, the soybean meal withdrawal volume of steel union sample enterprises last week continued to decline. Similarly, due to the slow harvesting and export speed of Brazil in the early stage, China’s imported Soybean in the first quarter may be relatively insufficient.

In general, it is expected that accumulation of soybean meal will only occur in late March to April, when spot and near-month future prices will be under pressure. Currently, the acceleration of harvests and exports in Brazil are faced with low subsidy from China, this will lead to relatively weaker soybean meal in comparison to the US market and profits are expected to be lower.

  

Soybean Oil

Upstream CBOT soybeans remained high and firm, this hovering of the high level is likely to be from the combination of dry weather in South America and Argentina, together with the negative impact of Brazilian soybean production expectations and lack of harvest progress. At present, the weather risk of CBOT soybean is largely accounted for, from February, the trading window of South American weather as a risk factor will draw to a close.

Brazil

The area of Brazilian soybean has expanded this year, while rainfall in northern Brazil is good. There is still a basis for abundant yields. Overall, the total Brazilian soybean production will still be a record, and the global soybean production in 22/23 will still be excessive. Although the current Brazilian soybean harvest is slow, with time and progress of the Brazilian soybean supply will gradually increase and supply pressure is expected to appear only in March. On February 23-24, the USDA Outlook Forum will make a preliminary outlook for US and global soybean planting supply and demand balance sheets in 23/24.

China   

In China, according to Mysteel agricultural product survey as of February 10, 2023, the commercial inventory of soybean oil in key areas across the country was about 790,500 tons, a decrease of 0.86 thousand tons, which is at a low level. Brazil’s slow soybean harvest progress will affect the arrival of domestic imported soybeans in February-March. It is expected that China’s soybean supply in the first quarter is expected to be tight.


 

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