Soybeans defy negative price trend of wheat and corn

The soybean price has been largely able to resist the recent price correction experienced by wheat and corn. One reason for this is the robust demand for soybean meal, which has risen by over 20% in price since the beginning of June, that is to say twice as sharply as the soybean price has increased, states Commerzbank. 

High processing margins are generating higher demand from processors who have few soybeans in stock following sluggish sales by farmers in recent weeks. High global demand is also shoring up the soybean price. China, the world's leading importer by far, had reported the second-highest soybean import figure ever in June. That said, it is primarily South America which profited from this: in June, China imported 23% more soybeans month-on-month from Brazil - the figure from Argentina was even up 68% month-on-month, though in absolute terms the import volume was much lower than from Brazil. 

"We are sceptical about whether soybean prices will be able to hold their own above the $10 per bushel mark in the medium term. After all, weather conditions in the US have improved, which has already put pressure on wheat and corn prices recently. Furthermore, competition from South America both from the most recent and from the future crop is likely to remain high: soybean acreage and production in Brazil are expected to achieve new record highs once again in 2015/16", says Commerzbank. 

The strong US dollar is additionally making US soybeans more expensive for foreign buyers. The US Department of Agriculture reported that Chinese advance purchases of the new US soybean crop are at their lowest level since 2007.