Global Soybean Prices Fall After Strong Increases in June and July

Published Sep 6, 2023

The soybean market has been affected by various global drivers, such as changing domestic policies, the Black Sea Grain Initiative, weather conditions, demand for soybean oil for biodiesel production, and logistical issues. Soybean prices strengthened in June and July due to drought conditions in the US and the fallout from the Black Sea Grain Initiative. However, current prices are relatively lower compared to that of June and July, and with the 2023-24 global soybean closing stocks expected to rise by almost 10 mmt YoY to 64 mmt, prices should be down until the last quarter of the year.

The soybean market has begun reacting to several diverse global drivers, including changing domestic policies, ripples from the Black Sea Grain Initiative, improving weather in the United States (US) Midwest, prospects for expanded demand, logistical issues, and demand for soybean oil for biodiesel production.

In June and July, soybean prices strengthened following the fallout from the Black Sea Grain Initiative and reports of expanding drought conditions in the US. Prolonged dryness, mainly in the corn belt and northern areas of the US Midwest, caused some nervousness among market players amid a looming supply disruption and pushed prices up.

By the close of trading in June, the Soybeans – US Gulf export price benchmark had gained €18 MoM to €509/t. By July, it had risen further to €532 per tonne, up 5% MoM. All major export prices also saw similar price movements:

- According to data from the International Grains Council, the Soybeans – Argentina, Up River export price traded up €5 MoM to €506 per tonne in July from €501 per tonne at the start of June.

- Brazil’s Paranagua soybean export price also moved up by €32 from June to €477 per tonne in July.

- The Ukrainian soybean also followed suit, edging up €6 over the month to finish July at €449 per tonne.

Currently, there is a general view among market players that positive sentiments are helping drive prices down or taking out some of the heat in the market. The Turkish government has been engaging the Russian government to return to the Black Sea Grain Initiative to ease the pressure on the grains and oilseeds trade. This seems to be pushing some bearish sentiments into the soybean market. Soybean exports in Brazil are also reportedly up and running, adding to the laxity.

In the US, 91% of the country's soybean acreage has begun settling pods, according to the United States Department of Agriculture’s (USDA) National Agricultural Summary. This is 1 percentage point higher than last year’s progress and the five-year average. Good weather so far has caused more than half of the US crop to be assessed as good to excellent.

Additionally, the 2023-24 global soybean closing stocks are expected to increase by almost 10 million metric tons (mmt) YoY to 64 mmt due to gains in Brazil and Argentina. This should create a higher stock-to-use ratio into the next season and keep prices down into the last quarter of the year.

Export prices are thus relatively lower compared to prices in June and July. The average price of soybeans - Argentina Up River is now down 4% MoM at €484 per tonne while Soybeans - US Gulf is also down 5% to €505 per tonne. The Ukrainian soybeans price has also fallen by 3% MoM to €435 per tonne while the Soybeans - Brazil, Paranagua has seen a marginal 2% MoM increase to €486 per tonne.

With current prices, buyers may come into the market to contract forward to take advantage of current market prices, although fundamentals suggest prices may stay at that level for some time. That could change at any time.