Special analyst Ding Yanming
Affected by the large number of US beans harvested and marketed, and the fear of drought weather in Brazil is about to ease, US bean prices have been volatile and weak since October. On October 16, the Chicago Board of Trade (CBOT) benchmark soybean November contract closed at 978.25 cents/bushel, down 43.25 cents/bushel, or 4.2%, week-on-week.
Selling pressure combined with rainfall in Brazil caused the US beans to fluctuate and fall
According to the analysis of special analysts of the grain and oil market newspaper, the main reasons for the recent decline in the price of U.S. beans are as follows:
Reason 1: The harvest progress of U.S. beans is fast, and a large number of listed selling pressure appears.
The recent sunny and dry weather in the main producing areas of the United States is conducive to the rapid progress of harvesting. The United States soybean harvest was 47 percent complete as of Oct. 6, compared with 26 percent a week earlier, 37 percent a year earlier, and a five-year average of 34 percent, according to the United States Crop Progress Weekly Report. In addition, the excellent rate of U.S. beans in the week was 63%, the highest since the same period in 2020, and the excellent rate of soybeans remained high, further strengthening the expectation of bumper soybean yields. The United States Department of Agriculture's October supply and demand report only slightly lowered soybean yields by 0.1 bushels to 53.1 bushels per acre; Production fell slightly by 004 million bushels to 4.582 billion bushels, still at the highest level on record.
Reason 2: United States soybean inventories are at a nearly four-year high.
The United States Department of Agriculture's quarterly inventory report released on Sept. 30 showed that old crop soybeans stockpiled at all United States locations totaled 342 million bushels on Sept. 1, up 29% year-over-year. Among them, farm inventories were 111 million bushels, a year-on-year increase of 54%; Off-farm stocks were 231 million bushels, up 20% year-over-year.
Reason 3: The main soybean producing areas in Brazil are forecast to usher in effective precipitation.
According to the National Meteorological Institute (INMET) under the Ministry of Agriculture of Brazil, there has been heavy rainfall in Paraná, Santa Catarina, São Paulo, Mato Grosso do Sul and Minas Gerais recently, and the cumulative rainfall within 24 hours may reach 70~125 mm, which helps farmers sow soybeans. Previously, farmers postponed soybean planting because the soil was too dry. Brazil's soybean planting progress in 2024/2025 stood at 5.1 percent as of Oct. 6, compared with 2.4 percent a week ago and 10.1 percent a year earlier, data from the National Commodity Supply Corporation of Brazil (CONAB) showed. Broker StoneX left Brazil's 2024/2025 soybean output unchanged at 165 million mt in October. Although drought and high temperatures have affected some areas, it is too early to tell whether current weather conditions will lead to crop losses or even a reduction in area, the consultancy said. Historically, about 70% of Brazil's soybean planting takes place between October 10 and November 25, and late planting is expected to accelerate as the rainy season approaches.
Brazil's exports have slowed significantly, which is good for export sales of US beans
According to the special analyst of the grain and oil market newspaper, the US beans still have strong support around 1000 cents / bushel.
Support 1: The progress of soybean export sales in United States has turned from negative to positive year-on-year.
As United States soybean prices were lower than Brazil soybeans, export sales improved, forming a bottom support for prices. United States official data showed that soybean exports in United States were 1.714 million mt in August, slightly higher than the same period last year and up 14.7% month-on-month. United States soybean sales totaled 20.14 million mt so far in 2024/2025 as of Oct. 3, up 3.7% year-on-year, according to the United States USDA's weekly export sales report.
Support 2: Brazil's soybean exports have slowed significantly, which is good for US soybean export sales in 2024/2025.
Due to the reduction in soybean production in Brazil and the rapid pace of exports in the early stage, the number of soybean exports has decreased year-on-year since August. Brazil's soybean exports in August and September were 8.04 million tons and 6.11 million tons, respectively, down 4.1% and 4.5% year-on-year, respectively, and Brazil's soybean exports are expected to continue to decline to 4.12 million tons in October, down from 5.95 million tons in October last year, according to data from the Brazil Foreign Trade Secretariat. In the future, the amount of soybeans available for export in Brazil will decline significantly, which is conducive to increasing the export of US beans. The United States Department of Agriculture expects United States soybean exports in 2024/2025 to be 50.35 million mt, up 9.2% year-on-year.
Support 3: Speculative funds reduced their net short positions in soybean futures for the seventh consecutive week.
The United States Commodity Futures Trading Commission (CFTC) position report showed that speculative funds held net short positions in the Chicago Board of Trade (CBOT) soybean futures and options position of 22,000 contracts on October 8, down 13,000 contracts from the previous week and 164,000 contracts from the July record high. In the later stage, it is still necessary to pay attention to the actual precipitation and soybean sowing in Brazil, and the progress of export sales of US beans.
Domestic soybeans open low and go low, and the market is waiting for policy guidance
During the National Day, the weather conditions in most parts of Northeast Heilongjiang and other parts were good, and the soybean harvesting work was advancing rapidly. According to the report, the content of soybean protein in the post-holiday centralized harvest has increased compared with the early harvest, and some companies have successively listed for the purchase of soybeans, but the price is significantly lower than that of the previous year.
On October 11, the purchase price of 38.5%~40% protein soybean net grain in Heilongjiang was 3780~3900 yuan/ton, down 250~300 yuan/ton from September 30, down 350~450 yuan/ton from the early stage of listing in mid-September, and down 1000~1100 yuan/ton year-on-year.
After the National Day, the price of domestic soybean futures fell by gap, falling to a minimum of 3,948 yuan/ton, the lowest since February 2020. On October 11, the closing price of DCE Douyi 2501 contract was 3977 yuan/ton, down 243 yuan/ton or 5.8% from before the National Day holiday; month-on-month down 325 yuan/ton, down 7.6%; down 1103 yuan / ton year-on-year, down 21.7%.
Supported by planting comparative income and subsidy policies, it is expected that the soybean planting area in Northeast China this year will be higher than that of the previous year, and the output will increase slightly compared with the previous year, and the national soybean output will be expected to remain above 20 million tons for the third consecutive year, and the domestic oversupply pattern will continue.
It is understood that since mid-September, the enthusiasm of processing and trading enterprises in Northeast China to purchase soybeans has not been high, mainly because of the oversupply pattern, the market is generally bearish, and the willingness of enterprises to inventory is poor. At present, enterprises have a strong wait-and-see mentality, and most of them are waiting for the next policy guidance.
With the continuous listing of soybeans in Northeast China in mid-October, special analysts of grain and oil market newspaper expect that domestic soybean prices will continue to be stable and weak in the near future, and pay attention to the purchase time and purchase price of large enterprises and national policy guidelines.