Soybean harvesting in the Northern Hemisphere and strong sales from Argentina are putting pressure on prices

The Argentine government has set a preferential exchange rate for soybean exporters at 200 pesos/dollar, although the official rate is 140 pesos/dollar, which has sharply boosted export sales.

According to the Rosario exchange, 2.13 million tons of soybeans were sold between Monday and Tuesday, compared to only 667,000 tons last week, as producers held back sales of products at much lower prices than last year amid the country's volatile economic situation.

Exports of soybeans, as well as meal and oil, are the main source of foreign exchange earnings for Argentina. By August 3, when the new exchange rate was set, producers had sold 52.3% of the 44 million tons of soybeans harvested in FY 2021/22. Last year, on this date, 62.8% of the collected 46 million tons were sold.

The move will boost soybean shipments from Argentina in the coming months, adding pressure to global soybean prices, which are already falling on forecasts of a bumper crop in the U.S. and falling demand in China.

Ahead of the USDA's new report, analysts estimate the U.S. soybean crop at the same level as the August forecast and expect an increase in pre-harvest acreage and a slight decline in yields.

Soybean quotes on the Chicago Stock Exchange fell 3% for the month, but September futures are 6% more expensive than November ones. This suggests that traders are expecting lower prices for new crop soybeans.

November futures are currently trading at $509.3/t, which corresponds to the price level at the end of February 2022.

On China's Dalian exchange, soybeans traded at 5,170 yuan/t, or $743/t, compared with $650/t last year.

According to customs data, China imported 7.17 million tons of soybeans in August, which is 25% less than the 9.5 million tons in August 2021. This is due to the increase in soybean prices and the drop in domestic demand due to the Covid-19 quarantines.

In Ukraine, demand prices for GMO soybeans remain at the level of 12,000-13,000 hryvnias/t on the farm, and the greatest demand is observed in ports, where exporters offer $350-390/t with delivery. Processors offer UAH 14,000/t with delivery to the factory for non-GMO soybeans, while exporters on French farms in the western regions offer UAH 13,000-14,000/t. Demand prices for deliveries to the western border increased from $450 to $480/t.

The seasonal decline in sunflower prices will lead to a drop in meal and cake prices, which will increase pressure on soybean quotes in the coming months.