June 13, 2023

 

eFeedLink: Global soyebean market and latest developments (June 12, 2023)

 

The global soybean market plays a crucial role in the agricultural industry, serving as a key commodity for animal feed.

 

Here's an overview of key developments happening in the global soybean market.

  

Chinese demand and record imports

 

China, the world's top soybean buyer, continues to drive global demand. In May, the country imported a record-breaking 12.02 million tonnes of soybeans, up 24% compared to the previous year (Reuters). This surge in imports can be attributed to delayed cargoes due to strict inspections as well as the diversification of sources of food supplies for enhanced food security (Global Times).

 

Meanwhile, price fluctuations in the soybean market have been notable. For instance, China's declining demand and feed producers' limited purchases led to a 14% price dip in soymeal over three weeks, according to eFeedLink (week ended June 5, 2023). Conversely, the recent influx of soybean imports into China has brought down prices, benefiting domestic buyers (Reuters).

 

In a related development, Manzhouli Port in Inner Mongolia, China, received a 271.6 tonnes shipment of Russian soybeans on June 7 (Global Times). This is considered a major milestone in the recently launched New Land Grain Corridor, which aims to enhance connectivity between China and the Eurasian Union countries, thus fostering strengthened cooperation in the agricultural trade sector. The shipment is seen as a step forward for China to cut dependence on a single country, such as the United States, for its soybean needs.

 

China, a major consumer of soybeans, and Russia, a major grain producer, have prioritised cooperation in the soybean sector since the signing of a development plan in 2019.

 

China currently imports around 85% or nearly 100 million tonnes of domestically consumed soybeans from overseas, with the US and Brazil being primary suppliers.

  

Brazil's dominance and surging exports

 

Brazil has emerged as a prominent player in the soybean market, surpassing the United States in both soybean and corn exports (Nasdaq).

 

Recent shipping data revealed Brazil's surge in soybean exports to the US, attracting importers due to competitive prices. The country's record-breaking soybean harvest, which was projected to exceed 154 million tonnes, has strengthened its position in the global market.

 

According to SEMADESCA, the Brazilian state of Mato Grosso do Sul produced a record 15 million tonnes in the 2022/2023 harvest, based on data from the Siga Project bulletin. This amount is connected to a 6% rise in planted areas, which has reached four million hectares for the harvest season.

 

Brazil plants soybeans from October to December and harvests during the March-May period, with the majority of exports occurring between March and June.

 

Last April, the country has overtaken the US when it comes to soybean shipments bound for the Chinese market (YiCai Global). Seasonal factors were reported to have contributed to this trend. 

 

Based on data from China's General Administration of Customs, the country brought in US$3.4 billion worth of soybeans from Brazil in April, compared to US$1.2 billion from the US.

 

However, in the first three months of 2023, the US was China's primary source of soybeans.

  

Bumpy ride for US soybean exports

 

Indeed, analysts had recently warned of a challenging market for US soybean exports, even as the country's soybean production could spike this year (RFD-TV).

 

One critical factor is the big increase in the world's soybean market supply, as soybeans from other countries enter the market at around the time the US is starting exports, according to Mark Jekanowski, chairman of the World Agricultural Outlook Board, the United States Department of Agriculture.

 

An initial forecast for US soybean saw an approximately 4.5 billion bushels increase, representing a 5% surge compared to the previous season. Yet, soybean exports may fall by 2%.

 

Argentina's drought impact

 

Argentina, another major soybean exporter, has faced significant challenges due to a historic drought. The country's ongoing soybean harvest is projected to yield only 21 million tonnes, marking a considerable decline from previous years (MarketScreener).

 

- Terry Tan, eFeedLink