The first month CFR China soybean physical flat price crossed the $700/mt mark for the first time since 2018, when it was assessed at $700.06/mt at the Asian close on Feb. 22, Platts data showed. The spike was fueled by rising freight rates, which were driven by higher crude oil markers on the back of the escalation in Russia-Ukraine tensions, as well as soybean prices basis FOB Santos.
Soybean arrivals in February and March might be lower than expected due to slower loading in Brazil and lower purchase volumes by crushers,” a source said. “The volumes are expected to be 5.75 million mt and 6.75 million mt, respectively.”
According to industry sources, at the end of last week, soybean stocks were around 3.95 million mt, while soybean meal stocks were around 330,000 mt, near the minimum level in five years. The inventory drawdown has caused soybean meal prices to jump, leaving hog-raising farmers struggling due to low hog prices.
China's National Food and Strategic Reserves Administration announced Feb. 22 that it will conduct auctions to release soybeans from state reserves. Some edible oil will also be sold as part of its rotation of oil stocks.
The market is expecting approximately 3.8 million mt of soybean and 300,000 mt of soy oil to be released and sold, a source said. However, the administration has not provided official detail about the volume of stocks to be released and the timing for the auctions.
“However, such stocks release might have limited impact on taming soybean prices,” a Chinese crusher said.
Meanwhile, FOB Santos soybean prices were driven higher due to a limited number of farmers selling and lower production volumes in Brazil. Freight rates were on the rise too, driving up the near-term replacement prices of nearby months, a Chinese trader said, adding that a large volume of soybeans released from state reserves might be needed to fill up the supply gap.
Source: Platts
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