Global soybean price to remain stable despite 18m mt output fall

Global soybean prices are expected to trade rangebound during the 2019/20 marketing year despite an 18 million mt decline in global production, with high global stocks keeping prices in check, Thomas Mielke, CEO of Oil World, said at the Globoil 2019 conference on Thursday.

Hamburg-based Oil World forecast the global soybean production at 344 million mt, compared to 362 million mt during 2018/19.

That annual loss in production is mainly driven by unfavourable plantings in the US earlier this year, where the 2019/20 production is forecast at 99 million mt, down 25 million mt on the year.

That decline is partially offset by higher output in Brazil, which the analysts estimate at 124 million mt, up from 118 million mt last year.

Argentina’s output will be marginally lower on the year at 54 million mt.

Global opening stocks remain high with “ample supplies in the world despite the fall,” as China halted buying US beans after a trade war between the two broke out.

Demand has been stemmed further by an outbreak of African swine fever, Mielke said.

That will take Chinese soybean crushing down by 12 million mt in the 12 months to September, muting global demand and keeping prices in check.

“There is no reason to expect soybean prices to move up significantly (this season), if at all,” Mielke said.

However, that depends on a large Brazilian crop, which is currently at risk due to dry weather that has delayed the planting of the upcoming soybean crop.

“Many farmers are delaying plantings in Mato Grosso and so there is uncertainty if we should [be] concerned. At the moment, it is too early to say, but it is something we have to watch,” Mielke said.

He added that the weather forecast for September and October is showing below normal rainfall.

With global demand falling to a lesser extent than global production, ending stocks are expected to shrink 6 million mt by the end of 2019/20 to 22.2 million mt.