Record-Setting Exports
The US is projected to achieve a record level of soybean meal exports in the 2024/25 marketing year (MR). According to estimates from the US MSG, exports are expected to reach 15.7 million tons, marking a 9.5% increase compared to the 2023/24 fiscal year (FY). This will be the third consecutive season of record-breaking exports despite the resurgence of Argentina, the world’s largest meal exporter, which had experienced an 18-year low in meal exports last year.
Argentina’s Soybean Production and Export Outlook
In Argentina, 50% of the soybean crop has already been harvested. Production is projected to be nearly double that of last year, albeit slightly lower than initially expected. As a result, Argentina’s exports of crushed soybeans and meal are expected to grow by 17% and 18% in FY 2023/24, respectively, and by another 13% and 12% in FY 2024/25, reaching a four-year high.
Reduced Competition from Brazil
The reduction of competition from Brazil, which will be actively supplying soybeans to China in 2025, is expected to further support the growth of US meal exports. This shift in market dynamics provides the US with a strategic advantage in increasing its soybean meal exports.
Increasing Soybean Processing Capacities Globally
Major soybean meal buyers, especially in Asia, the Middle East, and North Africa, have significantly increased their soybean processing capacities in recent years. This development will reduce their need for imported meal. However, US soybean meal will remain attractive to importers due to its competitive pricing, similar to South American meal.
Price Forecasts and Market Trends
The US MSG forecast predicts that the average price of soybean meal will decrease by 13% in the 2024/25 MR compared to the previous season, falling to $330 per ton. On Wednesday, soybean meal futures in Chicago traded at $371.7, which is 14% lower than last year’s level but 15% higher than the annual low.
US Soybean Processing Trends
The share of soybean processing in the total volume of US soybean consumption is gradually increasing. It is expected to reach 56% in FY 2024/25, the highest level since FY 2007/08. Increased purchases of soybeans from Brazil by China have led the US to reduce soybean exports and increase domestic processing.
From FY 2017/18 to FY 2020/21, US soybean processing volumes exceeded MSG forecasts. However, in the following three seasons, there was a slight decrease. In April, US soybean processing among NOPA members (which account for 95% of US soybean production) fell short of a monthly record for the first time this season, totaling 166 million bushels against a forecast of 183 million bushels.
Challenges and Market Dynamics
Several factors are influencing the current market dynamics:
- Plant Maintenance: Last month, several processing plants underwent routine maintenance, impacting output.
- Refining Margins: Refining margins were at their lowest in years, potentially weighing on production.
- Soybean Prices: Soybean prices have fallen to multi-year lows, affecting the overall market.
- Soybean Oil: Soybean oil has faced challenges due to negative dynamics in the renewable fuel market.
Factors Influencing Future Prices
Several factors will determine whether soybean meal prices will rise, remain stable, or fall:
- Global Supply and Demand: The balance between global supply, particularly from the US and Argentina, and demand from major importing regions will be crucial.
- Processing Capacities: Increases in processing capacities in major importing countries could reduce their reliance on imports, affecting prices.
- Government Policies: Trade policies and tariffs could influence export competitiveness and market access.
- Market Dynamics: Fluctuations in refining margins, plant maintenance schedules, and the renewable fuel market will impact production and pricing.
- Weather Conditions: Adverse weather could affect crop yields and supply levels, influencing market prices.
By closely monitoring these factors, stakeholders can better anticipate and respond to future price trends in the soybean meal market.