About Soybean Futures
Over the past five years, soybean futures prices have shown significant growth, rising by more than 30% in the long-term. Last year, prices reached a peak towards the end of May, driven by Russia's invasion of Ukraine, which caused disruptions in the outflow of commodities such as soybeans.
This situation resulted in a build-up of supply. However, a resolution was reached through an agreement brokered by the United Nations and Turkey, which helped alleviate the supply constraints. Since then, soybean prices have been on a steady downtrend. The market has seen increased supply due to record harvests, which may contribute to the continuation of this downward trend of Soybean Futures.
To better understand the Soybean futures, and know why does China import soybeans, read the latest Soybean Futures article series here.
In this article, we will provide updates on soybean futures in May 2023, including soybean future price, China soybean production, and how it might impact soybean futures in the coming months.
Soybean Futures Updates in May 2023
Soybean futures trading has been well-established, with key exchanges such as the Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), and COMEX being familiar to most traders.
Here are the findings according to the Orient Research Institute’s Weekly Updates on the Fundamental Data of Agricultural Products dated 20230522.
CBOT Soybean Futures
In the week of May 15, CBOT soybean futures experienced a decline, with the July contract losing over 6%. Despite BAGE's reduction of 1.5 million tons in Argentina's 2022/23 crop production, the market remained focused on expectations of improving US soybean balance sheets. The National Oilseed Processors Association (NOPA) reported a decline in crush volumes from 185.81 in March to 173.232 million bushels in April. This is due to a weakening cash crush margin and weak biofuel demand.
US soybean exports did not show improvement, with total cumulative commitments lagging from 14.23% last year vs. 13.16% a week ago. As of May 11, cumulative shipments were also behind last year's levels from 2.16% last year vs. about flat a week ago.
Dalian Soybean Futures
In China, the Dalian Commodity Exchange (DCE) saw stronger soymeal prices compared to CBOT soybeans. This can be attributed to changes in customs clearance regulations for soybeans and the depreciation of the Chinese yuan (RMB), which supported domestic soymeal prices. Soybean crush volumes were reported at 1.76 million tons last week, with an estimated increase this week to 1.873 million tons.
Outlook for Soybean Market Production
In the US, new crop planting progress and seed germination showed favorable patterns, with forecasts indicating a positive weather outlook for the coming week. The United States Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (WASDE) report released on May 12 provided a clearer picture of increasing soybean supply at both the US and global levels in 2023/24. According to Trading Economics, Soybean Futures have decreased 13.32% since the beginning of 2023, based on trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.
In China, it is anticipated that crush rates will ramp up, resulting in steady increases in soymeal and soybean oil supply. However, it is important to closely monitor crush rates as cash soymeal and spot basis may continue experience medium-term declines.
According to China.org.cn, the most active No.1 soybean contract for July 2023 delivery dipped 9 yuan (about 1.28 U.S. dollars) to close at 5,050 yuan per tonne. The total trading volume of six listed No.1 soybean futures contracts on the exchange was 251,419 lots, with a turnover of about 12.62 billion yuan.
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