Global Soyabean Prices May Moderate on Record Supplies, Says USDA

Global soyabean prices are projected to moderate in the 2023-24 period due to increased production in Brazil and Argentina, slowing demand growth in China, economic challenges in major importing countries, and ample soyabean supplies, according to analysts and the USDA.

Global soyabean prices are expected to moderate in the 2023-24 period due to several factors as per analysts.

The United States Department of Agriculture (USDA) reported that although US soyabean production is projected to decline, global output is expected to reach a record high, mainly driven by a bumper crop in Brazil and a recovery in Argentina. Slowing demand growth in China, economic challenges in other major importing countries like Egypt and Pakistan, and the abundance of soyabean supplies are anticipated to contribute to the moderation of global soyabean prices in 2023-24, as stated by the USDA.

The USDA's report also mentioned that US soyabean exports for 2023/24 have been revised downward by 3.4 million tonnes, and stocks have been reduced by 1.4 million tonnes.

However, the crush, which refers to the process of extracting oil from soyabeans, is only marginally reduced due to the strong demand for soyabean oil as a biofuel feedstock. The USDA expects the United States to be less competitive in the export market compared to South America due to smaller supplies and biofuel policies that incentivize domestic soyabean usage for crushing.

The constraints on US exports and strong domestic consumption are likely to compel trading partners to either pay higher prices or increase their purchases from Brazil.

In addition, the USDA's report mentions larger shipments of soyabean meal from South America and lowered soyabean import forecasts in major US markets such as Egypt and Mexico as offsetting changes to global soyabean and product trade.

Weather conditions also play a role in soyabean prices. The recent increase in soyabean prices was driven by concerns over the state of the US crop, as reports indicated worsening crop conditions, reaching their lowest level in over a decade.

However, the strength of the anticipated El Nino and its impact on global production will depend on further assessment by the US Climate Prediction Center.