According to a soy market analyst from Zhuochuang Information, the conclusion of the U.S. President's visit to China did not yield an announcement from the Chinese side regarding a new soybean procurement agreement. However, the U.S. stated last weekend that a new deal had been reached, leading to volatile trading in U.S. soybean futures. The market remains divided on the implementation prospects of this agreement. In the domestic soybean market, previously stagnant prices have recently begun to fall, with persistently weak demand cited as the primary driver. Zhuochuang Information forecasts a continued decline in domestic soybean prices through late May.
News of the new Sino-American agreement has provided some support to the external market, but the impact is relatively limited. Following the U.S. President's visit, China did not announce a new soybean procurement deal. However, based on a fact sheet released by the White House over the weekend, China has agreed to purchase at least $17 billion worth of U.S. agricultural products annually through 2028. These purchase commitments are separate from the U.S. soybean procurement pledges made last October. In late October last year, following a meeting between the two nations' leaders in South Korea, the U.S. stated that China would purchase at least 25 million metric tons of U.S. soybeans annually from 2026 to 2028. The market widely views the details of the new agreement as unclear, particularly regarding future execution, thereby weakening its bullish pricing influence. In terms of price action, the front-month July U.S. soybean futures contract initially fell and then rose. After peaking at 1235 cents per bushel on May 13, the price quickly declined, closing at 1177.25 cents per bushel on May 15, a drop of 4.7%. Following the release of the White House fact sheet over the weekend, prices rebounded sharply at Monday's open, trading around 1195 cents per bushel by midday on May 18.
Feedback from relatively high-frequency fundamental data indicates a decline in U.S. soybean crushing demand. The NOPA reported the April U.S. crush volume at 211.856 million bushels, down 6.3% from March's 226.161 million bushels. The average daily soybean crush was 7.062 million bushels, hitting a seven-month low. As crush volumes in preceding months repeatedly reached or neared record highs, processing plants began temporary shutdowns in April for seasonal maintenance, which was the main reason for the month-on-month decline. Therefore, domestic demand within the U.S. soybean demand structure has softened, while export expectations have increased, resulting in a neutral overall demand impact on U.S. soybean futures.
From a capital flow perspective in the futures market, non-commercial positions in U.S. soybean futures continue to be predominantly long. As of May 12, long positions stood at 289,800 contracts, while short positions were at 65,800 contracts, indicating a clear long-short imbalance that provides support for price increases from a funds perspective.
While the international soybean market is expected to be steady to slightly higher in the short term, domestic soybean market prices in China are poised to retreat. The market's sustained price stalemate since early May is expected to break in late May, with price reductions observed in both the northeastern and Huang-Huai-Hai production regions. It is noteworthy that the price cuts primarily involve low-protein supplies from the northeast and second-grade or blended soybeans from the Huang-Huai-Hai region. Prices for high-protein, quality supplies (northeastern protein content above 42% after screening; southern protein above 44% after color sorting) remain firm. The trend of higher quality commanding higher prices continues, as demand for these specific supplies is relatively stable, leading to steadier prices. In terms of specific price movements, low-protein screened supplies in the northeast have fallen below 2.3 yuan per jin, with the lowest in eastern Heilongjiang around 2.25 yuan per jin; 39.5% protein screened supplies have also dropped below 2.3 yuan per jin. In the southern production regions, second-grade mixed-color soybeans have fallen below 2.6 yuan per jin, while prices for high-quality varieties like Cuishan and Black Navel King remain relatively stable. However, overall, sluggish sales and weakening demand are the prevailing market conditions reported from both production regions, suggesting further downside potential for domestic soybean prices.
In summary, U.S. soybean futures prices may experience volatile gains influenced by the potential new agreement. For domestic soybeans in China, however, persistently poor demand has triggered price reductions. With no expectation for demand improvement in the near term, Zhuochuang Information forecasts that domestic soybean prices will continue to decline in late May, with the national average price expected to fall to 4,860 yuan per metric ton.
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