After an all-time record price for soybeans, the US futures market showed a declining price last week. This weekend the road to the top was started again. The market for oilseeds is continuing to pick up worldwide, and that does not affect the price of soy either.
On Tuesday, March 1, the March soybean contract on the CBoT ended at $17,06 per bushel, an all-time record. There had been speculation about this historic amount for several weeks. When it turned out that the South American soy harvest would (once again) be smaller than the sky-high expectations, the soy market suffered a shock reaction.
The day after this price, the American price slowed down, reaching $16,72 on Friday, March 4. However, in overnight trading, the price for March delivery rose again to $17 per bushel. The May contract is also well on its way to that price level. It stands at $16,93 per bushel.
Shift by sunflower oil
The market for vegetable oils has been at a high price level for some time. Now that the supply of sunflower oil is partly disappearing - Ukraine is responsible for 50% of this and Russia for 30% - the market is getting a new boost. With a 15% market share worldwide, sunflower oil is not as big a product as palm, soy and rapeseed oil, but it is a crucial one. Switching to another type of oil is also not always possible.
India is the largest buyer of vegetable oils. Almost a fifth of world production goes to that country. This includes 30% of all Ukrainian sunflower seeds. China is number two with 15% of world trade in its power. The conflict could not have come at a worse time for these two countries. Palm oil stocks have been reduced due to high prices. The strategy was to buy sunflower oil as a replacement. The European Union is also an important buyer of this type of oil and is therefore in third place.
Record price for palm oil
Palm oil was traditionally the cheapest type of oil, but has now become the most expensive. Record prices are also being set on this market. Indonesia, the world's largest exporter, is restricting its exports to calm the internal market. This actually causes price increases worldwide. This year, the futures market price has already increased by 45%. Soy oil can be a substitute for palm oil and accounts for 15% of global oil volume.
The soybean price is partly influenced by the oilseed market, but largely by harvesting and processing in North and South America. The harvest in Brazil is still being scaled back and neighboring country Argentina - where most of the oil comes from - is struggling to keep logistics going. Meanwhile, the United States is selling soybeans to China at a record pace, which analysts say is a sign of the future.
Enough soy?
Soy cultivation in the United States was already in good shape before 2022. The crop requires less nitrogen than corn. More wheat has also been sown. Analysts now expect that arable farmers in the country may not be able to sow enough soy to meet global demand next season. This is required until the new harvest from South America becomes available.
What does this mean for our country? Last week, the Central Bureau of Statistics (CBS) published figures known about the import of soy by our country. This involved 2,39 billion kilos, 75% of which is processed here. Mainly by the animal feed industry. A high soy price that persists for a long time therefore has irrevocable consequences for feed prices in the short and long term.