Over the past month, the price of CBOT soybeans has fluctuated between 1000 and 1050 cents per bushel, moving lower after a brief rally. The price center of CBOT soybeans continues to reflect the tight supply-demand balance in the U.S. soybean market, while international factors also significantly impact the price movements.
U.S. Supply and South American Growing Conditions Drive Price Fluctuations
The rally in CBOT soybean prices earlier in January was largely driven by a report from the USDA, which lowered U.S. soybean yield expectations and reduced the forecasted harvested area. However, as the USDA report primarily reflected U.S. harvest data, the global market has since adjusted, leaving the supply-demand balance in the U.S. soybean market still loose.
Attention is now shifting toward South America, where the soybean growing season is crucial. La Nina weather conditions have affected Brazil’s soybean harvest, with increased rainfall in the northern and central regions causing delays. Meanwhile, Argentina’s dry conditions have hindered planting progress, affecting yield expectations. These adverse conditions have led to some support for CBOT soybean futures. However, as weather conditions improved in February and harvesting gained momentum in Brazil, the outlook for South American soybean production became more optimistic, which weakened the rally.
Pressure on Prices as South American Harvests Peak
The February to April period is the peak season for South American soybean supply, creating significant downward pressure on international soybean prices. Analysts expect the upper resistance level for CBOT soybean futures to be in the 1080-1100 cent range per bushel. However, strong support from Brazil’s favorable crushing margins, alongside cost-driven support, will likely keep prices anchored between 1000 and 1020 cents per bushel.
Domestic Soybean Prices Stabilize Amid Declining Production Costs
Since 2022, domestic soybean prices in China have been on a downward trajectory, falling over 35% from 6,000 yuan per ton in 2022 to around 3,800 yuan per ton in early 2025. The decline is due to steady production increases paired with a lack of corresponding growth in domestic consumption, leaving the soybean market oversupplied. Although efforts like subsidies and intercropping have boosted domestic production, China’s soybean industry still faces challenges due to its reliance on imports, which constitute over 80% of the nation’s soybean needs.
Despite these difficulties, domestic soybean production has increased from 16.4 million tons in 2021 to an estimated 20.65 million tons in 2024. However, the country’s soybean consumption, primarily for food processing, has remained relatively stable, with domestic soybeans used mainly for food rather than oil extraction. Lower prices of animal-based proteins, such as meat and eggs, have suppressed demand for soy products, contributing to the ongoing pressure on the domestic soybean market.
Future Outlook: Stabilizing Prices Amid Modest Demand Growth
To stabilize domestic soybean prices, China’s soybean industry will need to see a sustained increase in demand. The government has focused on developing the entire industrial chain for soybeans, particularly in major production regions such as the Northeast, Southeast Coast, and Sichuan-Hunan zones. The 2024 Central Document No. 1 supports the development of processing parks, which could boost downstream demand for soybeans, reducing the supply-demand imbalance.
However, with the price of domestic soybeans nearing the cost of land rental in some regions, the scope for further price declines is limited. Domestic soybean prices are likely to experience further fluctuations as the industry transitions toward more sustainable demand-driven growth. Until the downstream processing sector stabilizes and expands, soybean prices are expected to remain under pressure, with prospects for gradual stabilization in the medium term.
