Soybean Meal in China Firms as Global Supply Tightens but Stocks Cap Upside

China’s soybean meal market is edging higher in July, supported by stronger US soybean futures, tighter global balance sheets and renewed Chinese buying of US beans, while heavy South American arrivals and rising domestic inventories are capping further gains. China’s feed sector has absorbed a surprisingly large part of increased crush, with soybean meal demand up around 12% year-on-year since early 2026. Yet the physical market remains well supplied as Brazilian and Argentine shipments peak and crushers run at high utilisation. The result is a firmer but still range-bound market, with local price strength lagging the rally in global futures.

Prices

US soybean futures gained around 1.5–2% over the past week, closing near 1,225–1,230 USc/bu on July 20, supported by a strong crush margin and firm meal and oil values. The July USDA WASDE cut projected US and world soybean ending stocks, reinforcing the upward drift in futures despite unchanged yield forecasts.

In China, this futures strength has translated into modestly higher soybean meal prices after several weak weeks, but abundant bean arrivals and growing meal stocks have prevented a full pass-through of the global rally. Domestic soybean FOB offers remain competitive versus global benchmarks, with recent indicative quotes for conventional Chinese yellow soybeans around EUR 0.71–0.73/kg FOB Beijing and organic lots about EUR 0.76–0.78/kg, after conversion from USD-based indications.

Supply & Demand

The July WASDE trimmed US old-crop soybean ending stocks to around 330 million bushels and also lowered global carryout, signalling a tighter international balance than previously expected. Together with strong crush margins, this has underpinned the global soybean complex even as planted US acreage has increased year-on-year.

For China, supply-side pressure remains pronounced. Large volumes of South American soybeans continue to land during the seasonal shipment peak, and crushers are operating at high utilisation rates. This is driving robust output of soybean meal and a gradual build-up of inventories, though stock growth has been slower than many traders anticipated as downstream demand has surprised on the upside.

The animal-feed sector is the key stabiliser. Despite ongoing financial strain in the hog industry, herd numbers have not materially declined, and overall feed demand has risen about 12% compared with the same period in 2025. Competitive soybean meal pricing relative to alternative protein meals has encouraged its higher inclusion in rations, limiting substitution and supporting domestic disappearance.

Fundamentals & Key Drivers

• US–China trade flows: Renewed trade discussions have translated into several large US soybean sales to Chinese buyers for the 2026/27 marketing year, improving US export prospects and reinforcing price support on the CBOT.
• Weather risk in the US Midwest: Hot conditions across key US soybean states have raised questions about pod setting and yield, though USDA has so far kept the national yield forecast unchanged. The market remains highly sensitive to any further stress during the critical reproductive phase.
• China crush and inventories: High crush rates, fuelled by ample Brazilian and Argentine supplies, are expanding soybean meal inventories. However, the build is slower than expected as feed mills step up offtake, preventing a sharp price correction and instead producing a more measured, range‑bound pattern.
• Relative pricing vs. alternatives: Soybean meal remains attractively priced versus other proteins in China, constraining substitution into rapeseed meal or DDGS and anchoring demand. This dynamic helps offset the bearish impact of high physical bean availability.

Weather Outlook

Short-term forecasts for the US Midwest point to a mix of hot spells and scattered storms over the coming 7–10 days, with some risk of excessive heat in parts of the Corn Belt but also episodes of beneficial rainfall. For now, weather is supportive rather than decisively bullish, but any shift toward sustained heat and dryness during pod fill would quickly tighten global supply expectations.

Outlook & Trading Ideas

China’s soybean meal market is currently balanced between bullish global signals and local supply headwinds. Tighter US and global stocks, improved US export sales to China and ongoing weather uncertainty in the Midwest argue for a moderately constructive medium-term stance on soybeans and soymeal. At the same time, heavy South American arrivals, high crush rates and rising Chinese inventories are capping nearby upside.

• Feed manufacturers (China): Consider locking in a portion of Q4 2026 soybean meal needs on price dips, given firm structural demand and the risk of weather‑driven rallies. Maintain flexibility for further spot buying if inventories continue to build and basis weakens.
• Importers: Balance purchases between US and South American origins. Use current South American availability to secure nearby coverage, but gradually increase exposure to US origin for 2026/27 given stronger export momentum and potential basis tightening.
• Producers / crushers: Maintain high but cautious utilisation rates. Utilize rallies driven by US weather or further WASDE stock cuts to hedge forward sales of beans and meal, while monitoring Chinese inventory growth to avoid overproduction risk.
• Financial traders: The risk‑reward favours a mildly bullish bias in the soybean complex, with options strategies around key US weather and report dates to capture volatility, rather than aggressive directional futures positions.

3‑Day Directional View (EUR-based)

• CME soybeans (converted to EUR): Slightly firmer bias, tracking US weather headlines and recent export sales.
• China soybean meal (domestic, implied EUR): Sideways to modestly higher; futures-led support offset by strong physical supply.
• FOB Black Sea / Ukraine soybeans: Mostly stable in EUR terms, with local fundamentals and freight dominating over CBOT moves in the very short term.