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On November 23, foreign media reported that as of the week ending November 22, 2024, global oilseed prices have fallen, with Chicago soybean futures approaching a four-year low, prompting Chinese buyers to actively purchase soybeans. The decline in soybean prices reflects the market's extremely optimistic outlook on South American soybean production, while the trade tariff policy proposed by US President elect Trump has brought uncertainty to the export prospects of US agricultural products. The uncertainty of biofuel policy prospects continues to cause a heavy decline in soybean oil, which has also dragged down soybean prices. In the coming weeks, market attention will increasingly shift towards South American weather and crop prospects, with strong demand for US soybean exports limiting the potential for price declines.
On November 22nd, the January soybean futures on the Chicago Board of Trade (CBOT) closed at around $9.835 per bushel, down 1.5% from a week ago; The average price of soybeans in Meiwan for December shipping was $10.70 per bushel, a decrease of 1.6%; December soybean meal closed at $291.5 per short ton, up 0.2%; Soybean oil closed at 41.84 cents per pound in December, down 8.0%; The Euronext rapeseed futures for February closed at around 508.75 euros per ton, a decrease of 5.7%; The January rapeseed season in Canada closed at around 592.2 Canadian dollars per ton, a decrease of 8.4%; The FOB spot price for soybeans in Argentina is $414 per ton (including 33% export tax), a decrease of 1.4%. On Friday, the ICE US dollar index closed at 107.507 points, up 0.8% from a week ago.
Trade Policy Prospects: China and Brazil Sign Trade Agreement to Defend Against US Trade War
On Wednesday, the top leaders of China and Brazil signed nearly 40 cooperation agreements, making Brazil China's first comprehensive strategic partner in Latin America. The Brazilian Ministry of Agriculture announced on Wednesday that China has approved Brazil's export of various agricultural products such as sorghum to China. In addition, China will also open its market to Brazilian fishmeal, fish oil, and other fish protein and fat.
Since the trade war between the United States and China in 2018, Brazil has replaced the United States as China's top soybean supplier. According to customs data, in the first 10 months of 2024, China imported 67.8 million tons of soybeans from Brazil, accounting for three-quarters of China's total imports; During the same period, China's share of soybean imports from the United States was only one sixth. After China approved the import of Brazilian corn at the end of 2022, Brazil replaced the United States as China's top corn supplier the following year.
As US President elect Trump threatens to impose high tariffs on China, strengthening trade relations between Brazil and China undoubtedly helps to resist the impact of future tariff increases, while also casting a shadow over the prospects of US agricultural exports, including soybeans. At the same time, we believe that the prospects for US exports to China are not necessarily bleak, but largely depend on two factors: the yield prospects and price trends of South American crops, and the situation of trade negotiations between China and the United States. If China and the United States continue the trajectory of the first phase trade agreement, China may significantly increase its imports of US soybeans by 2025.
The progress of soybean sowing in South America is smooth, and the yield prospects are optimistic
According to data from the Brazilian National Commodity Supply Company (CONAB), as of November 17, Brazil's soybean planting progress for 2024/25 was 73.8%, higher than 66.1% a week ago and 65.4% for the same period last year.
The Brazilian Association of Vegetable Oil Industries (ABIOVE) released its first crop yield forecast for the new season on Tuesday, predicting that the Brazilian soybean harvest in early 2025 will reach a record high of 167.7 million tons, an increase of 9.4% year-on-year. ABIOVE's production data is higher than the 166.14 million tons predicted by Brazil's National Commodity Supply Company (CONAB) last week, slightly lower than the current forecast of 169 million tons by the US Department of Agriculture. ABIOVE stated that according to current production expectations, Brazil's soybean exports will reach a record high of 104.1 million tons, a year-on-year increase of 5.9%; The soybean processing volume will also reach a record high of 57 million tons, a year-on-year increase of 4.6%.
In neighboring Argentina, recent rainfall has also improved soybean planting and growth conditions. The Buenos Aires Grain Exchange announced on Thursday that the progress of soybean planting in Argentina has reached 35.8%, an increase of 16% from a week ago. Most soybean producing areas have good surface water conditions and soybean crops are growing well. Currently, the US Department of Agriculture predicts Argentina's soybean production to be 51 million tons.
In terms of weather prospects, the National Weather Service Climate Prediction Center (CPC) announced on Thursday that there is a 57% chance of La Ni ñ a occurring from now until December, and it will continue until January to March next year. Even if La Ni ñ a occurs, it may have a shorter duration and weaker intensity. The La Ni ñ a phenomenon usually limits precipitation in southern Argentina and Brazil, which is not conducive to the growth of soybean crops.
The export sales of soybeans in the United States are accelerating; Chinese buyers order up to 35 shipments of soybeans this week
The US Department of Agriculture's weekly export sales report shows that as of the week ending November 14th, the US soybean export sales volume was 1.86 million tons, 20% higher than last week but 7% lower than the four week average. So far in 2024/25, the total sales of soybeans in the United States have reached 31.58 million tons, a year-on-year increase of 9.0%, and a week ago, the year-on-year increase was 6.4%. The US Department of Agriculture expects a year-on-year increase of 7.7% in exports for the full year. So far this year, the total sales of soybeans from the United States to China have been 14.73 million tons, a year-on-year decrease of 8.5%, and a year-on-year decrease of 11.7% last week.
From the quotation, on November 21st, the soybean price in Meiwan was $400/ton, a decrease of $4 from a week ago. Brazilian soybeans are priced at $420 at the Paranagua port, a decrease of $3. The price of Argentine soybeans on the river is 414 US dollars per ton, a decrease of 3 US dollars. This week, the US Department of Agriculture released four daily export sales reports, with 261300 tons of soybeans sold to Mexico on Monday; On Wednesday, it was reported that 202000 tons of soybeans were sold to China and 226200 tons were sold to unknown destinations; On Thursday, it was reported that 198000 tons of soybeans were sold to China and 135000 tons were sold to unknown destinations; On Friday, it was reported that 198000 tons of soybeans were sold to unknown destinations.
According to Eduardo Valnin, an analyst at the Brazilian Agricultural Investment Commodity Company, Chinese buyers have been very active in the market this week, buying a total of 32 to 35 shipments of soybeans, including 13 shipments from the United States, all purchased by China National Grain Reserves Corporation to replenish national reserves. Chinese private oil factories continue to search for soybeans to be shipped in Brazil from January to February 2025 or in the United States in December 2025.
Mississippi River water level improves, barge transportation accelerates
Recently, there has been frequent rainfall in the Midwest of the United States, causing the water level of the Mississippi River to rise and improving barge transportation. According to official data from the US Department of Agriculture, as of the week ending November 16th, the total amount of grain transported by barges was 781550 tons, an increase of 2% from the previous week and 5% from the same period last year. A total of 541 grain barges were shipped downstream that week, an increase of 42 from the previous week and higher than the 473 ships from the same period last year; There were 933 grain barges unloading at the Port of New Orleans, a decrease of 5% from last week but higher than the 712 ships in the same period last year.
From the perspective of exports, as of the week of November 14th, there were 31 ocean going grain ships loaded in Meiwan, an increase of 41% compared to the same period last year. Between November 15th and 25th, it is expected that 61 ocean going grain ships will be loaded, an increase of 22% compared to the same period last year. In terms of shipping costs, as of November 14th, the grain shipping cost from the US Gulf to Japan was $49.75 per ton, down 1% from a week ago and $57 per ton in the same period last year; The freight rate from the West Coast to Japan is $29.50 per ton, which is the same as the previous week and the same as the same period last year.
International Grains Council: Global soybean production to reach a record high of 419 million tons in 2024/25
According to the latest monthly report released by the International Grains Council (ICE), global soybean production for 2024/25 is expected to reach a record high of 419 million tons, a decrease of 1.6 million tons from the previous month but an increase of 6% from the previous year, due to the expected bumper harvest of soybeans in major producing countries. The reason for the downward adjustment of global soybean production forecast this month is that the forecast for soybean production in the United States has been lowered by 3.3 million tons to 121.4 million tons. This decrease exceeds the increase in production in Brazil and Ukraine. Brazil's soybean production has increased by 1 million tons to 164 million tons, while Ukraine has increased by 1.1 million tons to 6.1 million tons.
Global soybean consumption is expected to be 408.5 million tons, an increase of 2.3 million tons from last month and a 5.6% increase from the previous year. The global soybean trade is expected to be 180.2 million tons, an increase of 900000 tons from last month and a 0.8% increase from the previous year. After the above adjustments, the global soybean ending inventory is expected to be 82.1 million tons, a decrease of 3.9 million tons from last month but an increase of 15% from the previous year. The global soybean inventory usage ratio is expected to be 13.95%, higher than last year's 12.63%.
Before the new US government's trade policy becomes clear, the volatility in the soybean market intensifies
Considering that the soybean harvest in the United States has ended and South American soybeans will not be harvested until early next year, it indicates that seasonal pressures are weakening. If supported by South American weather or Chinese demand, soybean prices are likely to experience a seasonal rebound; However, considering the record breaking global supply expectations, the soybean market is expected to experience increased volatility in the coming weeks until the new US government's trade policies become clear.