In W36 in the soybean landscape, Tridge’s analysis indicates that the global soybean market experienced fluctuations due to shifting domestic policies, impacts from the Black Sea Grain initiative, improved weather conditions in the midwest in the United States (US), growing demand for soybean oil in biodiesel production, and logistical challenges. Initially, soybean prices surged in Jun-23 and Jul-23, driven by concerns over the Black Sea Grain initiative and US drought conditions. However, recent developments turned market sentiment bearish. Turkey's discussions with Russia to rejoin the Black Sea Grain initiative and active soybean exports from Brazil eased pressure. Also, favorable weather in the US led to 91% of soybean acreage entering the pod-setting stage.
Moreover, global soybean closing stocks for 2023/24 are projected to rise by nearly 10 million metric tons (mmt) year-on-year (YoY) to 64 mmt, primarily due to increased production in Brazil and Argentina. This is expected to result in a higher stock-to-use ratio for the upcoming season than the previous cycle, exerting downward pressure on prices in Q4-23. As a result, soybean export prices softened, enticing potential buyers to secure forward contracts, although market fundamentals suggest price stability in the near future.
Tridge’s data analysis indicates that soybean prices in Argentina were favorable for buyers in W36, with rates at USD 0.28 per kilogram (kg), a 30% week-on-week (WoW) decrease. The United States Department of Agriculture’s (USDA) report in Aug-23 about the sale of 105 thousand metric tons (mt) of soy cake and meal contributed to the softening of the soy complex. Additionally, the anticipated El Niño phenomenon is expected to bring increased moisture to the South American region, which bodes well for the upcoming 2023/24 soy harvest. However, the soy market remains uncertain about its future direction, and until a significant catalyst emerges, prices are likely to continue trending downward.
Soybean prices in Russia started to react to the arrival of a new crop in W36, undergoing active harvesting in the southern and north Caucasus federal districts. Although there was considerable excitement in Aug-23 in the central region, resulting in a notable soybean price increase, rate moderation is expected in the near term. However, the situation in the Central Federal district will also hinge on the timing of harvesting, which may shift and subsequently influence prices.
Lastly, Russia’s 2023 soybean harvest outlook remains highly favorable, but the demands of major players in the central region are also increasing. The equilibrium between supply and demand, factoring in the heightened utilization of new processing facilities, will become clear in the next two to three months.