New crop soybean prices remain under pressure from increased production in Brazil

The soybean market has experienced an unusual situation this season when, amid a poor harvest in Argentina and increased demand in the United States, prices for U.S. soybeans exceeded prices for the normally premium Brazilian soybeans, allowing China to step up imports of cheap soybeans from Brazil.

A reduction in exports of old-crop soybeans from the U.S. is holding down new-crop prices, even though new-crop conditions in the U.S. aren't too favorable.

According to Reuters, in July, compared to July 2022, China reduced soybean imports from the United States by 63% from 382.6 to 142.15 thousand tons, while it increased supplies from Brazil by 32% to 9.23 million tons thanks to a good harvest and low prices for Brazilian soybeans. According to the State Customs Service of the People's Republic of China, from January to July, soybean shipments from the United States grew by 10.8% year-on-year to 19.85 million tons, and from Brazil by 12.2% to 38.9 million tons.

November soybean futures on the Chicago Stock Exchange rose 2.8% during the week to a 3-week high of $500/t amid dry and hot weather in the US Midwest.

According to the USDA's weekly Crop Progress report, as of August 20, 96% of the soybean crop was in the flowering phase and 86% was in the pod formation phase, matching the level of the last 5 years. The number of soybean crops in good or excellent condition was the same as a week ago, 59% (57% last year).

Markets will be affected this week by data from the annual Pro Farmer tour of soybean and corn crops in the US Midwest.

According to the USDA, for August 11-17, soybean exports from the USA decreased by 24.4% compared to the previous week to 316,000 tons, of which 108,000 tons were sent to Italy and 85,000 tons to Germany.

In Ukraine, prices for new-crop soybeans fell to $400/t with delivery to Danube ports, although a week ago they were $500-515/t for old-crop soybeans. The reason was forecasts of a high soybean harvest at the level of 4.2 million tons (compared to 3.7 million tons last year) and a decrease in prices for rapeseed and sunflower of the new crop.

Soybean demand from EU countries remains low as they have significant stocks. Demand prices for deliveries in October - November are 400 €/t with delivery to EU countries neighboring Ukraine and 430-440 €/t with delivery to Italy.

Forecasts of an increase in soybean planting area and harvest to 163 million tons in Brazil (compared to 155 million tons in 2023 and 127 million tons in 2022) will increase the pressure on quotations in September-October, especially in case of favorable weather for sowing in Brazil and Argentina.