World soybean prices are falling, increasing pressure on prices in Ukraine

The increase in the forecast for global soybean production due to the increase in the US harvest estimate by 0.73 million tons to 124.15 million tons (which will exceed the previous season's figure by 8 million tons) has increased the pressure on soybean quotes in Chicago and prices in Ukraine. Additionally, the markets are pressured by favorable weather conditions in the US and Brazil, which so far confirm optimistic harvest forecasts.

 

November soybean futures in Chicago fell 2.4% last week to $464/t (-5.3% for the month), losing speculative growth caused by expectations of a reduced harvest in the US and increased exports to China.

 

A 4.5% decline in US soybean processing in September to 5.34 million tonnes (which was significantly lower than analysts' expectations) is also weighing on prices, but US soybean oil inventories fell 12.4% year-on-year to their lowest level since November 2014 at 478,000 tonnes (-15.3% year-on-year), indicating potential demand for the oil from the biofuel industry.

 

In Ukraine, soybean prices have decreased less than those for rapeseed and sunflower, but restrictions on sea exports and the increase in the cost of road and rail logistics for deliveries to buyers in the EU continue to lower export demand prices, which are further pressured by falling stock prices.

 

Purchase prices for GMO soybeans from Ukrainian processors remained at UAH 15,500–17,000/t delivered to the plant during the week, although the drop in sunflower prices to UAH 16,000–16,500/t and the decline in sunflower meal prices will increase pressure on domestic soybean meal prices, and then on soybeans in the near future.

 

Export prices for GMO and non-GMO soybeans have practically equalized and are $420–440/t with railcar delivery to the western border. Demand prices with delivery to Odessa are about $380/t or UAH 17,000–17,200/t, while soybeans are purchased at $400–410/t in Danube ports.

 

As of October 12, 2.56 million tons of soybeans have been threshed in Ukraine from 73% of the area or 1.169 million hectares with an average yield of 2.19 tons/hectare, and the final harvest will be lower than expected, which stimulates processors to more actively accumulate raw material stocks.