Soybean oil and meal futures in China fell to 6-month lows

Soybean oil and soybean meal futures on China's Dalian exchange fell for three straight sessions amid weaker demand and increased supply from South America.

On Tuesday, May soybean oil contracts fell 3.8% to a 7-month low of 7,204 yuan/t, or $1,003.79/t, the biggest one-day decline in a year.

Soybean meal futures fell to RMB 2,944/t, or $410.21/t, the lowest level since July 2023.

The demand for these products is decreasing, as the Chinese have already stocked up for the New Year celebration, and the need for animal feed is decreasing.

"The accumulation of oil and fat on the eve of the Chinese New Year ends. The market prospects for demand for these products are weak, and the process of inventory reduction may slow down," Guoyuan Futures experts believe.

The decrease in the number of pigs due to the high costs of their maintenance and the drop in animal prices led to a decrease in the demand for soybean meal. In the medium to long term, traders expect a decline in demand for soybeans in China.

At the same time, prices are being pressured by an increase in soybean production forecasts in Argentina in 2023/24. Experts of the Grain Exchange of Buenos Aires raised their estimate to 52.5 million tons.

Analysts believe that soybean oil prices on the Dalian exchange may drop to 6,617-6,860 yuan/t, and soybean meal - to 2,776-2,936 yuan/t.