About Soybean Futures
Soybeans hold a significant position in the global agricultural landscape, serving as a primary source of animal protein feed and vegetable oil. Due to their widespread usage and economic importance, Soybean Futures have become one of the most actively traded agricultural commodities worldwide. In fact, they account for over 10% of the total value of global agricultural trade.
According to the World Agricultural Supply and Demand Estimates (WASDE) report, the projected global soybean production for the upcoming 2022/2023 crop year stands at 369.6 million metric tons. To put this into perspective, if we were to evenly distribute the entire soybean crop among the world population, each person would receive approximately 46 kilograms of soybeans.
This article will provide insights into the latest developments surrounding Soybean Futures, Soybean Meal Futures, and Soybean Oil Futures for the month of June 2023. The information presented in this article is largely based on Orient Research Institute's Weekly Updates on Fundamental Data of Agricultural Products dated 20230612, and other credited sources.
Soybean Futures
Soybean Demand and Supply
The supply and demand for soybeans have been experiencing notable trends. In Inner Mongolia, the purchase of soybeans by regional reserves has stimulated the spot market for soybeans in Northeast China. However, in the southern region, buying and selling activities have slowed down as the wheat harvesting season takes precedence.
An auction was held by China Grain Reserves Corporation (Sinograin) for domestically produced soybeans from the 2017-2018 period, but no transactions occurred. This is an indication of weakened demand.
China soybean production in both the Northeast and southern regions currently have a surplus soybean grain of approximately 10%. The recent hot weather conditions have further impacted the industry. This leads to lower operating rates for soybean product manufacturers.
The El Niño weather pattern expected this year is anticipated to bring more moisture and cooler weather to the central and western regions. However, it may be too late to alleviate the current conditions.
The low good-to-excellent rating for soybean planting and the pressure on crop growth due to the drought raise concerns about the yield prospects for the new crop.
Soybean Futures Price
The price of Dalian Soybean Futures increased in the week of June 12.
According to Trading Economics, the price of Soybean Futures has remained stable at around $14 per bushel on June 19 2023. This upward momentum can be attributed to market concerns about crop conditions, particularly the impact of dry weather in the United States Midwest.
The purchase of soybeans by market-level reserves in Heilongjiang and Inner Mongolia is also nearing completion. This further reduces its influence on soybean prices. Meanwhile, the spot price of soybeans in the southern region has experienced a slight increase.
Heightened weather concerns have significantly boosted CBOT Soybean prices. This resulted in the substantial gains in the September contract for Dalian Commodity Exchange’s Soybean No. 1 on Thursday and Friday.
Soybean Meal Futures
Soybean Meal Demand and Supply
Weather concerns in major US soybean-producing regions are dominating the international soybean market. Drought-affected areas in these regions have increased to 51%, with severe drought impacting 16% of the areas. Soybean planting rate is at 96%, emergence rate was 86% and the good-to-excellent rating has dropped to 59%. This is lower than the market's average estimate of 60%.
Although some precipitation is expected in the coming week, it may not be enough to improve soil moisture conditions. Continued attention to the weather is necessary.
US soybean exports remain lackluster, with Brazilian soybean prices declining. This comes with the fact that Brazil is still expected to remain the main global soybean exporter in the coming months.
On China’s end, soybean imports have been sufficient, and soybean inventories at oil mills continue to rise. 111 oil mills reached a crushing volume of 2.0767 million tons in the previous week, surpassing expectations. It is estimated by the China Iron and Steel Association (CISA) that the crushing volume will be 1.9974 million tons this week.
Soybean meal inventories at oil mills have increased from 11,200 tons to 472,300 tons. Soybean meal futures are expected to follow the international market's upward trend due to weather concerns and a decline in imported soybeans arriving in August.
Soybean Meal Futures Price
According to Gov Capital, the price of Soybean Meal Futures is $417.550 (per metric ton) on 19 June 2023. The data also indicates that the commodity price has been in a downtrend for the past year.
Considering the supply pressure caused by soybean imports, a decline in the price of soybean meal might be expected. However, some crushing companies may reduce their operating rates to maintain profitability, which could support prices.
Therefore, it is important to closely monitor the operating situation of oil mills to determine the future trend of soybean meal prices.
Soybean Oil Futures
Soybean Oil Demand and Supply
According to Mysteel's research, the commercial soybean oil inventory in key areas of China was approximately 873,100 tons as of June 9 2023. This represents a weekly increase of 27,200 tons but remains relatively low compared to previous years.
The operating rate of oil mills is stable at around 65%. With a significant influx of imported soybeans expected in June, domestic soybean oil production, supply, and inventory are expected to rise.
Mysteel's tracking statistics indicate that China is projected to import around 9.3925 million tons of soybeans in June, with preliminary estimates of approximately 10.2 million tons in July and 8 million tons in August. As more imported soybeans arrive, domestic soybean oil inventories will continue to increase.
In addition, the May crushing data from the National Oilseed Processors Association (NOPA) exceeded expectations, resulting in a decline in inventories for soybean oil. This is positive news for CBOT soybean and global soybean oil market.
The final regulations from the Environmental Protection Agency (EPA) regarding blending requirements for biodiesel have been postponed until June 21. This announcement is expected to impact soybean oil demand and crushing expectations.
Soybean Oil Price
As of 19 June 2023, Dalian Commodity Exchange Soybean Oil Futures is priced at 7722 yuan/ton (according to the latest oil prices).
Trading Soybean Futures from Dalian Commodity Exchange (DCE China)
You can trade Soybean Future Contract from Dalian Commodity Exchange through Orient Futures Singapore. Please note that Dalian Commodity Exchange trading hours are as follows: 9:00AM - 11:30AM and 1:30PM - 3:00PM Beijing Time.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG).
We provide premium customer service at an affordable cost to all our clients. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
