Prices and demand for soybeans are falling as the South American harvest continues

Soybean prices in Chicago fell to a 2-year low, unable to be supported even by a heatwave in Argentina and a downgrade in Brazil's crop outlook.

Following world quotations, soybean prices in Ukraine for delivery to Black Sea ports last week fell by $5-10/t to $420-430/t or UAH 18,200-18,400/t, after which processors lowered prices by 200-300 UAH/t up to UAH 16,500-17,300/t with delivery to the factory.

The export of soybeans from Ukraine in January decreased by 43% compared to December to 305 thousand tons (406 thousand tons in January 2023), and in general in the 2023/24 season reached 1.9 million tons, which is 18% higher than last year's pace ( 1.6 million tons). It is worth noting that the soybean harvest in 2023 increased by 30% compared to last year to 4.8 million tons.

According to forecasts, as a result of blocking the import of soybeans to neighboring EU countries, the volume of its processing in Ukraine will remain at the level of the previous season of 1.5-1.6 million tons.

The export of soybean oil in January amounted to 31 thousand tons, and in general in 2023/24 MR reached 139 thousand tons (110 thousand tons for the same period last year). In FY 2022/23, Ukraine exported 277,000 tons of soybean oil (an average of 23,000 tons per month), which is equivalent to processing 1.4-1.5 million tons of soybeans.

Importers are gradually lowering their asking prices in anticipation of supplies of cheap soybeans from South America. The recorded delivery of a batch of soybeans from Brazil to the USA confirms that prices for South American soybeans will remain lower than for American soybeans.

March soybean futures on the Chicago Stock Exchange during the week traded at $439.5/t (-4% for the month). There is no prospect of an increase in demand. Pork prices in China, which usually rise ahead of the New Year, have eased this year, adding pressure to soybean meal and corn prices.

Exports of soybeans from the USA for January 26 - February 1 increased by 56% compared to the previous week to 1.426 million tons, and in general in 2023/24 MR reached 29.12 million tons, which is 24% lower than last year's pace.

In Brazil, soybeans have already been harvested on 16% of the area, but StoneX experts, against the background of unfavorable weather forecasts, reduced the estimate of the soybean harvest by 2.5 million tons to 150.4 million tons, and corn - by 2 to 95 million tons, which is 4.2 million tons and 6.9 million tons, respectively, will be inferior to last year's indicators.

Markets are expecting that the new USDA report, which will be released on February 8, may lower production forecasts for Brazil.