Up to 10th June, the forward price of soybean in Chicago Board of Trade (CBOT) is 12.08 USD/Bushel, reaching the record high since August, 2014 and increasing about 9% on the accumulative basis. The CBOT soybean price has been rising in nine straight weeks since mid-April, up 28% while Chinese domestic soybean forward price skyrockets as high as 36%. Continuous drop of international production and rising price of domestic live pig may somehow drive the market demand for the soybean meal. The market has already grown tight and drawn a large amount of capital investment.
Chinese domestic soybean meal supply pressure is relatively smaller
It’s known that a total of 128 boats carrying 8.2 million tonnes soybean would arrive at the ports in this month, June 2016, which is higher than the amount of 7.66 million tonnes in May. It’s expected that there is still a large amount of soybean arriving in the following three months, which is 7.8 million tonnes in July, 7.5 million tonnes in August and 6.7 million tonnes in September. The soybean oil companies have already began selling and almost finished the advance selling contract for June. Present factory oil stock is at low level while lots of contract needs to be dealt with. With skyrocketing price of the forward product, domestic factories are all very positive to improve the price of the meal.
Young pig captivity rate rises, leading the market consumption
As the weather turns hotter, the pork demand further decreases, which brings pressures for its price. But the pig grows slowly in high-temperature weather, and there is a little shortage of pig supply. In general, the sellers of pig and pork are still at the active position in market, and the price would still be at high level. Besides，the supply shortage of young pig also causes its price up. In brief, the increasing price of pork and young pig drive both the soybean demand and its price going up.
Positive USDA report of June may further bring the soybean price up
The USDA report shows that America sows 8, 220 acres soybean in the new season. USA continues to improve the export of soybean to offset the decreased amount of supply in South America. There is a little alternation in unit production and culturing area. The profit would be more that previous period. According to its statistics, America has completed 56% sowing in early June, which is faster than expected. But the heavy rain is expected to hit Texas and Minnesota, which would delay these regions’ farming. However, this can support future sustainable market.
In conclusion, the American soybean price surpasses 1, 100 cents, which spurs domestic market price of soybean meal. Its average price in one week has increased up to more than 3, 100 yuan/tonne. What’s more, the domestic farming industry condition is in positive side and there is a large demand of the soybean meal. The soybean stock pressure in ports is also in low level, plus the US dollars interest rates increasing not as expected and positive USDA report of June. All of these factors would continue strongly supporting domestic soybean meal market.
