Soybean prices are under pressure, both in the short and longer term.
The IGC price index, a measure of the price of soybeans in the world, fell to 299 points on Monday, February 27 (year 2000 = index 100). The trend for the soybean price has been declining since the end of February. Compared to a year ago, the price index is 9% lower.
The pressure on prices is partly due to the fact that Brazil expects a record harvest and the Brazilian harvest is progressing. Furthermore, it is very dry in Argentina. But the lack of moisture seems to have already been factored into market prices, preventing soybean prices from rising further. The record Brazilian harvest is expected to be greater than the disappointing Argentinian crop yield. In addition, a possible record harvest in the United States could lead to additional price pressure in the long term.
Soybean prices on the Chicago futures market are also under pressure due to a lack of news. Late last week, the US Department of Agriculture (USDA) reported that US soybean acreage is estimated at 35.4 million acres for the 2023-24 season. That is slightly lower than previously assumed. Production is estimated at 122.7 million tons, which is comparable to previous estimates.
Compared to the 2022-’23 season, the harvest in 2023-’24 is estimated to be 5.5% higher, which means that the closing stock will increase. It is important to know that the forecast for the 2023-24 harvest is based on supply and demand and the actual harvest yield. Weather conditions can still strongly influence the final production of soybeans.
On the other hand, the oilseeds market is currently supporting palm oil prices in Malaysia. Since the beginning of February, there have been concerns about a tighter global supply of palm oil and demand from China and India is picking up. Indonesia, the largest producer of palm oil in the world, is limiting exports, partly due to flooding in the west of the country. The Malaysian palm oil regions are also experiencing flooding, which is expected to cause damage to the harvest.