Soybean meal demand is expected to remain strong over the next crop year, while global meal stocks look set to remain tight, consequently keeping prices high and helping accelerate the rise in the US soybean crush margin in recent weeks, say analysts.
Lower global supply and complications around Ukrainian meal exports, exacerbated by the closure of the Black Sea grain corridor, have helped provide underlying support to meal markets, according to an oilseed market report from CRM Agri.
Despite soy oil prices rising, the oil price share has remained relatively stable in and around 80%, which has sent the crushing margin— the premium attained from processing soybeans into meal and oil—soaring. That surge highlights the tightness in global meal markets, reported the UK analysts.
US soybean market
Global soybean output estimates for 2022/23 and 2023/24 were revised slightly lower by the US Department of Agriculture (USDA) in recent weeks, mainly due to weaker output from the US and Argentina. Consequently, for 2023/24 soy meal production was revised down one million tons to 259Mt in July, said the team.
Looking to the US soybean prospects, and concerns are increasing over condition scores for the crop. As with corn, US crop conditions have been poor and at multi-year lows so far, they noted.
“Combined with the downwardly revised area estimates and poor condition scores, US harvest estimates are likely to be trimmed again, further tightening physical supply for the remainder of 2023 and into the start of 2024.”
While supply estimates are being trimmed, demand for US soybeans has remained subdued, found the CRM Agri outlook.
“New crop US export sales have remained the slowest since 2019, with little sign yet of recording a seasonal increase in demand.”
Even if the slow pace of US export sales has subdued the US oilseed market, this trend is likely to be reversed this month, predicted the analysts.
“Amid what are concerns about the potential size of the US crop and gaining vegetable oil values, US soybean markets have the potential to make further gains.”