July saw a redemption in the Chinese soybean meal market
The soybean domestic market continues to meliorate in the last week of July, keeping up with the northward price winds for soybean in the Chinese market since the onset of July. Registering a price hike of 13.4 percent, Soybean prices are currently at 4,486 RMB/ton compared to 3,956 at the beginning of July. On the whole, the soybean trajectory experienced a rise of nearly 14 percent.
The primary reasons attributed to July fluctuation were supply, inventory, futures, and demand
The abundance of soybean imports stayed in China during the first half of 2023. May and June continued witnessing a high soybean import, with June contributing to the 10.27 million tons of imports of 52.27 million tons from January to July. The first half of 2023 recorded a Y-O-Y increase of 13.6 percent.
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Contrasting to the soybean import trend in China till the end of June, July witnessed a staggered trajectory. The July imports kept receding and were recorded at a Y-O-Y slash of 18.84 percent and were registered at 4,35,800 tons. The declining imports upswing the faltering price trend of the soybean meal market and eased the supply side pressure.
Soybean inventories saw a zigzag trajectory throughout the first half of 2023. While the inventories declined significantly to witness the lowest record of 200,000 tons in the initial few weeks of May, mid-May saw an upsurge ending till June (at around 7,10,000 tons by the June end).
On the other hand, July followed an oscillatory trend in the soybean meal market. While the inventories recorded 52,000 tons initially, it bounced back to be recorded at 600,000 tons by July 25.
Regarding demand, the month of July experienced hot weather and prolonged high temperatures, which had a direct impact on meat consumption at feed terminals. Consequently, there was a reduction in meat consumption, leading to a slowdown in the demand for soybean meal. Market participants became more cautious in their feed purchases, opting to buy only the necessary amounts.
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As a consequence, transactions of soybean meal weakened, which in turn curtailed the rise in soybean meal prices.
According to Procurement Resource, China's soybean market improved in the last week of July, with prices rising by 13.4% to 4,486 RMB/ton compared to the beginning of the month. Soybean imports were abundant in the first half of 2023, increasing by 13.6% year-on-year. However, in July, imports decreased by 18.84%. Fluctuations in inventory and demand also impacted the soybean meal market, with inventories reaching a low of 52,000 tons and rebounding to 600,000 tons by July 25. Hot weather in July reduced meat consumption, slowing soybean meal demand and suppressing price growth.
