W43: Soybean Oil Update
In W43 in the soybean landscape, Brazil's potential for a record-breaking soybean harvest in 2023 faces a threat from El Niño, resulting in excessive rainfall in the south, sporadic rainfall in the Midwest and North, and crop delays. The country's National Commodity Supply Company (CONAB) forecasts a soybean production of 162 million metric tons (mmt), surpassing the previous year's 154.6 mmt. Despite challenges, Brazil had planted 30% of the estimated area for the 2023/24 soybean harvest by October 19, with Mato Grosso leading among the states, representing an increase of 13% week-on-week (WoW) but a decrease of 34% year-on-year (YoY). Soybean exports from Brazil have risen significantly, with October 2023 shipments reaching 6.88 mmt, a 16% increase from Sept-23 and a 79% increase compared to Oct-22.
Soybean prices in the Brazilian domestic market have increased due to growing demand both domestically and internationally, with adverse weather conditions exacerbating the situation. The demand for soybean meal, a crucial component in animal feed and the processed food industry is a major driver of this price increase. Irregular weather conditions in the south and southeast of Brazil, such as excess humidity, are hampering farming activities, raising concerns about soybean crop productivity and market supply.
In China, soybean processing increased by 29% WoW to 2 mmt during October 19-25. This volume is also 27% higher YoY, mainly due to enterprises resuming operations after a holiday period. However, soybean stocks in China decreased by 16% within the week, reaching 4 mmt as of October 25, reflecting a 14% decrease month-on-month (MoM) for the year but a 21% increase YoY. China's soybean imports from Brazil in Sept-23 totaled 6.88 mmt, marking a substantial 23.4% YoY increase.
In the week ending October 19, the United States (US) shipped 2.46 mmt of soybeans, in line with projections. The 2022/23 season's total now stands at 7.89 mmt, reflecting a 3% increase compared to the previous year's period. The rapid pace of soybean harvests in the US is set to continue, with farmers having already harvested 76% of their soybean crop, which aligns with commercial expectations and surpasses the five-year average rate for crop harvesting. Moreover, the United States Department of Agriculture (USDA) notes that growers are working under warm, dry conditions as they race to complete harvesting before the upcoming wet season.
Poland has a significant demand for soybeans for processing, according to the president of the Polish Soy Association. The annual soy consumption market in Poland ranges from 500 thousand mt to 800 thousand mt, with a cultivated area of 44 thousand hectares (ha). Polish farmers are expected to harvest around 120 thousand to 150 thousand mt in 2023. Poland expresses interest in sourcing soybeans from Ukraine. However, challenges such as complex logistics and long queues at border crossings due to permit documents have hindered the sale of Ukrainian soybeans to Poland, as noted by Polish market experts.
Lastly, as of October 20, Russian farmers have harvested 24 mmt of oilseeds, a 1.5-fold increase compared to the same date in 2022. This includes 5.4 mmt of soybeans (1.5 times more). Moreover, forecasts suggest that the total oilseed harvest in 2023 will reach 27.5 mmt, including a record soybean harvest of 6.47 mmt.