Soybean price: low Chinese imports trigger demand concerns

Soybean price has been on a downtrend since mid-July. It is on a rebound; trading sideways around 1,345’0 in the CBOT market.

Demand concerns

Soybean price’s downtrend is largely due to the recent slowdown in China’s importation of the commodity from the United States. Since last summer, China has been aggressive in stocking up agricultural commodities like corn and soybeans. The heightened imports were facilitated by the country’s economic recovery from the coronavirus pandemic. Besides, the steady recovery of its hog herd following the African swine flu outbreak in 2018 further boosted prices.

In the past year, China bought 100.33 million tonnes of the agricultural commodity. The figure represented an increase of 56.3% from the prior year. In particular, the Middle Kingdom purchased 6.6 million tonnes from the US in July 2020. In comparison, it has bought 450,000 tonnes from the US in July 2021.

Even with the current demand concerns, investors remain optimistic that the growing hog herd in China will help boost soybean price. According to the nation’s agriculture ministry, the hog population is almost at full recovery. Between January and May, the herd rose by 24%. China usually processes about 80% of the imported soybeans into animal feeds. From this perspective, demand worries will likely ease in the coming weeks.

In the ensuing sessions, the focus will be on August’s WASDE report scheduled for 12^th August. In the previous report, the US Department of Agriculture lowered its estimates of China’s imports for the 200/21 and 2021/22 seasons by 2 million tonnes and 1 million tonnes respectively. Lower estimates for Chinese soybean imports are likely to further weigh on prices.  

Soybean price technical outlook

Soybean price remains on a downtrend, which has been in place since mid-July. On 16^th July, it hit a one-month high of 1,474’2 in the CBOT (Chicago Board of Trade) market. However, the fundamentals have since triggered a decline of about 8.95%.

At the time of writing, the soft commodity was up by 0.47% at 1,342’0. Notably, it hit a 5-week low of 1,312’0 on Tuesday. At that level, it entered the oversold territory with an RSI of 25. Since then, it has rebounded by 2.59%. On a two-hour chart, it is trading slightly above the 25 and 50-day exponential moving averages.

In the near term, soybean price is likely to trade sideways along its current level of around 1,345’0. If more buyers enter the market, it will probably rise to 1,360’0 before pulling back to 1,345’0. On the flip side, a move below 1,333’0 will likely clear the path to the lower levels of 1,320’0 and the week’s low of 1,312’0.