Soybean Meal: US-China Summit Viewed as Major Catalyst for U.S. Soybeans

**Core View: Range-Bound Trading** This week, soybean meal exhibited a pattern of strong external markets and weak domestic performance, with basis under pressure. Prices found support from rising U.S. soybean prices and expectations of Chinese purchases, but were capped domestically by a significant increase in arrivals, weak livestock demand, and rising inventories. In the short term, focus is on the upcoming USDA report and the US-China summit. The medium-term outlook hinges on South American arrivals and domestic crush rates. The overall market is expected to remain in a high-range, volatile pattern with clear upper resistance and lower support.

**Spot Basis: Bearish** Ample supply continues to pressure spot and forward-month basis. Spot prices are weaker than futures, and crushers have limited ability to support prices.

**South American Soybeans: Bearish** Brazil is experiencing a bumper harvest and has entered its peak export season. Argentina's harvest is progressing, with relatively stable production.

**U.S. Soybeans: Bullish** New-crop planting is ahead of schedule. The upcoming USDA report is expected to show a neutral-to-tight supply/demand balance for the 2026/27 season. The upcoming US-China meeting has led markets to speculate on increased Chinese purchases of U.S. beans.

**Import Purchases: Neutral** Purchases are focused on near-month Brazilian soybeans, with large arrivals expected from May through September. Crush margins for next year's new crop are attractive on the futures board.

**Soybean Arrivals & Inventory: Bearish** Monthly arrivals from May to August could average as high as 11 million tonnes. Soybeans are entering an inventory accumulation phase, indicating ample supply.

**Soybean Meal Consumption & Inventory: Neutral** Weekly soybean meal inventory continued to decline, slightly better year-on-year. Crush rates are expected to rebound in May, increasing supply.

**Macro Factors: Neutral** Factors include the US-China meeting, currency exchange rates, geopolitical relations, and weather.

**Soybean Meal Futures** Last week's fund flows showed characteristics of "short-term exodus, medium-to-long term still观望." There is significant divergence among market participants regarding soybean meal. Bullish funds are primarily betting on subsequent uncertainty in U.S. soybean weather and potential changes in US-China trade relations, buying on dips based on cost support. Bearish funds are mainly industry hedging positions, betting on increased domestic supply from May arrivals. Current core positions are concentrated in nearby and deferred active contracts, with notable increases in volume and open interest for the deferred M01 contract. In the physical market, crushers collectively sold forward basis for May-July of next year last Friday, with transactions reaching 1.963 million tonnes at a price range of M01 minus 180 to minus 240 yuan. This concentrated selling by crushers is primarily due to attractive crush margins, allowing them to lock in profits, while downstream acceptance of the price was also relatively high.

**01. Pressure from South American Bumper Harvest Being Released** **Brazilian Soybean Export Peak Season** Brazilian soybean production is estimated at over 180 million tonnes, marking a historically super bumper harvest. The harvest is concluding, and the peak export season is underway. Over the past week, Brazilian soybean basis weakened across the board before showing a slight recovery later in the week. Farmer selling slowed, export loadings declined, crush margins narrowed, and a stronger Real pressured offers. Overall, the market shifted from "active selling" to a wait-and-see approach ahead of the USDA report and the US-China summit, turning cautious. Brazilian exports remain strong: April exports reached 16.75 million tonnes, setting a new monthly record, with a daily average of 837,000 tonnes. This follows 14.52 million tonnes in March. May shipments are estimated at 15 million tonnes. Brazilian exports to China: Exports to China were 11.46 million tonnes in April. May shipments to China are estimated at 10-11 million tonnes, with 4.15 million tonnes already shipped year-to-date. The Brazilian Real continues to appreciate: The USD/BRL exchange rate is around 4.9, continuing its appreciation trend, which reduces the competitiveness of Brazilian soybeans.

**2025/26 Brazilian Soybean Basis Declines** Last week, farmer sales were approximately 3.1 million tonnes (about 2.9 million tonnes old-crop, 0.2 million tonnes new-crop). Sales progress for the 2025/26 crop is about 59.2%. Brazilian FOB Basis: Nearby-month basis fell 10-18 cents last week before stabilizing slightly later, while deferred months remained weak. Santos Port FOB Flat Price: Weekly prices increased. Quotes for June-August shipment were $460-$472/tonne. Brazilian CNF: Offers fell 5-10 cents for June shipment. China Import Cost: The landed duty-paid cost for June-July arrivals is 3,820-3,870 yuan/tonne. The cost for August-September arrivals is about 3,920-3,970 yuan/tonne due to higher basis quotes. The cost for March-April next year arrivals is about 3,600 yuan/tonne.

**2026/27 Brazilian Soybeans Show Weakness** Forward sales for the 2026/27 crop are about 3.9% or 6.92 million tonnes (production estimate about 179 million tonnes), below the five-year average of 8.9%. This year's forward sales are slow, indicating farmer reluctance to sell the new crop due to unattractive prices. Santos Port FOB Basis for Feb-May 2027: Shows a significant discount to nearby months. The quote for March shipment is about +10 cents, up about 20 cents weekly, but 45 cents cheaper than the current June shipment quote. CNF: Crush margins for importing next year's Brazilian soybeans into China are attractive due to weak offers. Basis is mostly 110-130 cents, with a landed duty-paid cost of 3,600-3,650 yuan/tonne, translating to a board crush margin of 300-400 yuan/tonne, favorable for domestic crusher purchases.

**High Logistics Costs Persist** Shipping costs from Brazil to China remain elevated, and inland costs are high. The total transportation cost for Brazilian soybeans to China (inland freight + ocean freight + port charges) is currently about $62-$68/tonne. Ocean freight constitutes the largest portion, remaining high year-on-year despite a slight weekly decline. Ocean Freight Cost: Currently $51-$57/tonne. For June shipment, it's $51.6-$54/tonne, down slightly $1-$2/tonne weekly, but up 48% year-on-year, still at high levels. Inland Cost: From Mato Grosso to Santos Port is about $10-$13/tonne. Port Charges (Loading, customs, storage): Brazilian port charges are about $2.9-$3.5/tonne. Chinese port charges are about $8-$12/tonne. Total is about $11-$15/tonne. Comparison with U.S. Gulf: Ocean freight from the U.S. Gulf to China is $66-$68/tonne. Brazil holds a logistics advantage, being $11-$15/tonne cheaper.

**Argentine Soybean Harvest Accelerates** Soybean Harvest: As of May 6, the Argentine soybean harvest reached 34.3%, up from 18.3% the previous week. The historical average for the period is 39%. Weekly progress accelerated by 16 percentage points. The core region is about 60% complete, and harvesting continues to speed up. First-crop soybean harvest is 45% complete, while late-planted soybean harvest is 12% complete. Soybean production is estimated at about 49 million tonnes. Soybean Exports: Exports were 7,000 tonnes in March and 4,100 tonnes in April. So far in May, exports are about 370,000 tonnes (all destined for China). As the harvest progresses, May exports are expected to increase continuously, further adding to the global soybean supply.

**02. US-China Meeting → Expectations for Chinese Purchases of U.S. Soybeans** **U.S. Soybean New-Crop Planting Progress** U.S. Soybean Planting: As of May 10, U.S. soybean planting was 49% complete, up from 33% the previous week, compared to 45% last year and a five-year average of 36%. Weekly progress increased by 16 percentage points. Planting is significantly ahead in Nebraska (64%), Indiana (51%), and Minnesota (51%); only Michigan (12%) is lagging. U.S. Soybean Emergence: Soybean emergence reached 20%, up from 13% the previous week, compared to 6% last year and a five-year average of 5%. Early planting has accelerated the emergence pace. The USDA is set to release its May supply and demand report, potentially increasing soybean acreage by 1-2 million acres. The yield estimate is around 52 bushels per acre. Next Two Weeks: Weather in the main U.S. grain-producing regions will be predominantly "rainy and warm." Most of the corn/soybean belt will see above-normal temperatures and precipitation, with only the southeast being drier. Overall conditions are favorable for emergence, but localized wetness could cause soil crusting and uneven emergence. Overall, weather premium is limited.

**Market Expects China May Increase U.S. Soybean Purchases** For the week ending April 30, U.S. soybean exports were 530,000 tonnes, with new sales of 140,000 tonnes. Over the past four weeks, cumulative exports were 2.73 million tonnes, with cumulative sales of 1.01 million tonnes. Exports to China for the week were 200,000 tonnes, with cumulative exports to China over the past four weeks at 1.31 million tonnes. 2025/26 Crop Year Cumulative: Cumulative exports are 33.24 million tonnes, representing 79% of the export forecast of 41.91 million tonnes. Outstanding sales are 5.67 million tonnes. Combined exports and outstanding sales total 38.92 million tonnes, accounting for 93% of the forecast, compared to 95% last year and a five-year average of 98%. Cumulative exports to China year-to-date are 10.60 million tonnes, with 1.20 million tonnes outstanding, totaling 11.80 million tonnes, compared to 22.48 million tonnes in the same period last year. While China's current purchases are low, the upcoming visit by former President Trump to China has led markets to expect new Chinese purchases of U.S. soybeans, potentially improving old-crop exports.

**03. Arrival Pressure Intensifies, Demand Remains Weak** **Soybean Purchases** Soybean Purchases: According to CHS tracking, purchases for June are 88% complete, July 55% complete, and August 27% complete. Domestic crushers are focusing on purchasing near-month Brazilian soybeans. Import Crush Margin: The CNF for Brazilian soybeans shows a pattern of nearby months stronger than deferred. The board crush margin for nearby June-August shipment is between 70-140 yuan. Margins for next year's February-July are attractive, above 300 yuan. Soybean Imports: Actual soybean imports in April were 8.4778 million tonnes, up 2.40 million tonnes year-on-year. Cumulative imports from January to April this year were 25.15 million tonnes, up 1.96 million tonnes year-on-year. Brazilian exports to China were 9.95 million tonnes in March, approximately 10.56 million tonnes in April, and estimated at 11 million tonnes in May. This will lead to massive arrivals in China from May to August, with monthly averages potentially reaching 11 million tonnes.

**Massive Arrivals from May to August** Soybean Import Estimates: Reuters tracking suggests May arrivals of about 13.12 million tonnes, with June already at 11.25 million tonnes. Monthly arrivals from May to July are estimated around 11 million tonnes. Arrival Estimates Based on Vessel Lineups: Brazilian soybean arrivals are estimated at 11.35 million tonnes for May, with June already at 9.76 million tonnes. Argentine soybean arrivals for May are already at 47,000 tonnes, with 307,000 tonnes expected for the month. Based on vessels already shipped, U.S. soybean arrivals for May are about 1.715 million tonnes, with June already at 1.167 million tonnes.

**Crush Rates to Peak This Week** Last week's crush rates fell short of expectations: For the week ending May 8, crushers processed 1.5362 million tonnes of soybeans (down 88,400 tonnes weekly), 65,100 tonnes higher than expected. The operating rate was 42.3%. This week, soybean processing is estimated at 1.946 million tonnes, up 409,800 tonnes weekly, with an operating rate of 53.59%. Crush rates are recovering rapidly, entering a period of concentrated high operation. Crush volumes and operating rates in almost all regions are set to rebound significantly, reflecting that the pressure from raw material arrivals has been transmitted to the production side. Starting this week, soybean arrivals at crushers will increase, leading to concentrated resumption of operations. Crush volumes will hit recent highs, and soybean meal supply pressure will be significantly released.

**Soybeans Entering Inventory Accumulation Phase** Soybean Arrivals: For the week ending May 8, 125 companies received 2.054 million tonnes in arrivals. Cumulative arrivals over the past four weeks were 7.215 million tonnes, with weekly arrivals increasing noticeably. Monthly arrivals from May to August could average 11 million tonnes, with arrival pressure continuously mounting. Soybean Inventory Stops Declining: As of the week ending May 8, national port inventory was 6.968 million tonnes, up 805,000 tonnes week-on-week and 734,000 tonnes year-on-year. Crusher soybean inventory was 5.93 million tonnes, up 610,000 tonnes week-on-week and 580,000 tonnes year-on-year. Soybean inventory continues to accumulate, with stock pressure increasing.

**Soybean Meal Inventory: Low Current Level vs. Clear Accumulation Trend** Soybean Meal Apparent Demand: For the week ending May 8, apparent consumption of soybean meal was 1.14 million tonnes (down 13,400 tonnes weekly). Cumulative apparent demand over the past four weeks was about 4.67 million tonnes. Crusher Soybean Meal Inventory Drawdown: As of the week ending May 8, crusher soybean meal inventory was 341,000 tonnes, down 93,300 tonnes weekly but up 240,000 tonnes year-on-year. Outstanding contracts increased by 1.3755 million tonnes weekly to 5.30 million tonnes. The combined soybean-equivalent meal and actual meal inventory at 111 crushers was 4.53 million tonnes, compared to 4.00 million tonnes in the same period last year. The five-year average is about 3.60 million tonnes. Physical Inventory: Feed company withdrawals were average, with most maintaining routine restocking and continuing to digest previous inventory. Inventory days continued to decline. Weekly physical inventory days fell by 0.71 days to 7.33 days, compared to 4.45 days in the same period last year.

**Soybean Meal Inventory by Region**

**Heavy Trading Volume for May-July Next Year** Soybean Meal Trading: Last Friday, single-day basis trading by crushers surged to 1.963 million tonnes, mainly concentrated in May-July of next year. The trading price was between M01 minus 180 to minus 240 yuan, equivalent to a flat price of about 2,850 yuan. Breakdown: North China traded 540,000 tonnes, East China 500,000 tonnes, Guangdong 420,000 tonnes, and Shandong 160,000 tonnes. The concentrated selling by crushers was primarily due to attractive crush margins for locking in profits, while downstream acceptance of the price was also relatively high.

**Increased Volume and Open Interest in Soybean Meal M01** Soybean Meal Futures: The market is betting on the US-China meeting and the USDA report. U.S. soybean prices rose, pulling domestic soybean meal higher, but gains were capped by expectations of increased supply. Soybean Meal-Rapeseed Meal Spot Spread: The national成交 price for 38%蛋白 rapeseed meal is 2,360-2,390 yuan. The national average成交 price for 43% protein soybean meal is 2,947-2,977 yuan. The spot spread between soybean meal and rapeseed meal has narrowed to around 600 yuan. Soybean Meal Inter-Month Spreads: The Q3 pressure continues to support the bear spread in M5-9 and M7-9, although the space is continuously narrowing, the logic remains and both are at historically extremely low levels. Volume and open interest for the M01 contract increased last week. The M9-1 and M11-1 spreads, affected by nearby month pressure, are also at extremely low levels for the period, with the bear spread continuing.

**Soybean Meal Spot and Basis** Soybean Meal Spot: Post-holiday prices across regions stabilized with slight rebounds following the board. Today, Shandong prices are the lowest nationally at 2,890 yuan, up 30 yuan from the previous week's low of 2,860 yuan. Prices in East China and Guangdong are similar, while North China is slightly higher. Soybean Meal Spot Basis: Basis in major producing regions is generally between -90 to -130 yuan. Market expectations for ample future supply are fully priced in, keeping basis under pressure. Soybean Meal Forward Basis: East China crushers quote June-July at M09 -10 yuan; August-September at M09 +0 yuan; October-January at M01 +50 yuan. Forward basis remains weak under pressure with small fluctuations. Basis for May-July next year is M01 -240 yuan, with good成交 last Friday.