W38: Soybean Update

Published Sep 28, 2023
W38: Soybean Update

In W38 in the soybean landscape, the United States Department of Agriculture (USDA) expects global soybean production to reach 401.3 million metric tons (mmt) in the 2023/24 season, an 8.4% increase from the 370.1 mmt in 2022/23. Projections for the South American harvests indicate a 4.5% year-on-year (YoY) boost for Brazil, reaching 163 mmt, while Argentina is expected to surge by 92% YoY to 48 mmt. Paraguay is also predicted to increase 2023/24 soybean production by 10.5% compared to the 2022/23 season, reaching 10 mmt. On the contrary, the United States (US) soybean production is estimated at 112.8 mmt in 2023/24, a 3.0% decrease compared to the 2022/23 harvest of 116.4 mmt.

Global soybean exports are forecasted to be spearheaded by Brazil at 97 mmt in 2023/24, a 2.1% growth from the 2022/23 volume of 95.0 mmt. The US is expected to ship 48.7 mmt, a 10.1% YoY drop from 54.2 mmt. Argentina's exports are projected at 4.6 mmt, a 15% increase over the 2022/23 level of 4.0 mmt. China's soybean imports are anticipated to reach 100 mmt in 2023/24, a 2% decline from the 2022/23 season. Global soybean ending stocks are set to increase by 15.8% in 2023/24, reaching 119.2 mmt, supported by rising stocks in Argentina and Brazil.

The soybean market in Mato Grosso do Sul, Brazil, slowed with stagnant prices in W38, attributed to a regional holiday affecting transportation. Prices varied across cities, trading at USD 25.16/bag in Dourados, at USD 24.96/bag in Maracaju, at USD 24.76/bag in Sidrolândia, at USD 24.56/bag in Campo Grande, and at USD 24.56/bag in Chapadão do Sul. Soybean prices declined for the second consecutive session in Mato Grosso, reflecting an overall negative market situation. Surprisingly, this downward price trend aligns with expectations of low soybean productivity in Brazil and the US, coupled with reduced demand for grain. Campo Verde saw prices at USD 24.36/bag, Lucas do Rio Verde at USD 23.54/bag, Nova Mutum at USD 23.70/bag, Primavera at USD 24.46/bag, Rondonópolis at USD 25.16/bag, and Smile at USD 23.42/bag, with varying reductions.

APK-Inform reports that Ukraine is on track for a record soybean harvest of 4.8 mmt in 2023, with a six-year high in the sown area. However, due to an influx of new crop raw materials, Ukrainian processors started to reduce soybean purchase prices. The market is flooded with offers of low-protein soybeans from farmers, and some companies are considering skipping soybean purchases for 2023 due to quality concerns. Processors who urgently need to replenish stocks for contract obligations purchase in small batches. Although soybean quality issues exert price pressure, the oversupply relative to demand is pushing prices down.

The 2023 soybean harvest prices range from USD 350.80 per metric ton (mt) to USD 391.28/mt of SRT in Ukraine, lower than the 2022 season's closing rates. Soybeans remain the most expensive among Ukraine's major oilseeds, but an expected supply increase is anticipated to influence the market significantly. Dry weather aids the active harvest campaign, and 2022's humidity issues have not yet resurfaced, possibly causing farmers to withhold sales if prices drop significantly.

Lastly, soybean prices remained relatively stable in the Russian market as the harvest season began in W38. This was primarily due to a robust demand from domestic consumers who entered the new harvest season with limited reserves and are now actively procuring soybeans. However, as harvesting in the central region accelerates, the current buying frenzy is anticipated to subside in the next two weeks. This situation may potentially lead to soybean purchase price declines. This shift could also be influenced by low global soybean and meal prices, driven by heightened competition from the new US crop.

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