As the Spring Festival holiday begins, demand has been subdued ahead of the festivities, with traders winding down operations early. However, soybean futures have surged significantly just before the holiday, rising by nearly 400 points. This has led to expectations that soybean prices may be raised by traders across regions after the holiday.
Overall, market demand remains moderate, falling short of the previously anticipated high-volume sales and active stockpiling by distribution areas. Instead, purchasing has been largely need-based, with buyers ordering only to meet immediate requirements. The key question now is how soybean prices will trend after the New Year.
Post-holiday restocking is expected to gradually take place. The soybean spot market in 2025 has been unique, with early low prices followed by a steady rise, prompting demand-side buyers to make substantial purchases according to their needs and build sufficient inventories. Later, due to higher procurement costs, some distributors either sold at a loss with poor sales or adopted a wait-and-see approach due to the impact of COFCO’s auctions. As a result, the volume of soybeans shipped from production areas to sales regions remained limited.
Subsequently, the purchase prices set by state-owned reserves provided some support compared to the 2024 procurement prices, which also boosted spot prices. However, due to excessively high prices and a clear price inversion between production and sales regions, purchasing activity in sales regions remained sluggish. There was also little enthusiasm for pre-holiday stockpiling, with some buyers cautiously making small, need-based purchases and planning to reassess their procurement strategies after the holiday based on market conditions.
Amid this subdued atmosphere, traders in production areas began taking holidays as early as late January. With sales regions showing low acceptance of high prices before the holiday, suppliers in production areas feared post-holiday price declines and released some of their inventories. However, subsequent COFCO auctions saw full transactions with high premiums, leading to a gradual reluctance to sell. Additionally, after a period of pre-holiday sales and consumption during the Spring Festival break, already low inventories on the demand side have been further depleted and may continue to decline.
After the holiday, the reopening of universities and increased institutional consumption are expected to boost market sales.
Soybean futures rose significantly before the holiday, closing at 4,674 yuan per ton, up 98 yuan, with trading volume reaching 382,166 lots and open interest at 323,745 lots. This upward trend was supported by tight port supplies and strong market expectations for post-holiday restocking, driving bullish sentiment among investors.
After the holiday, as oil processors and traders gradually resume operations, downstream procurement demand is expected to increase. Coupled with limited remaining grain stocks at the grassroots level and reluctance among traders and farmers to sell, spot prices are likely to rise accordingly. Market sentiment is currently bullish, with prices expected to remain stable or slightly higher in the short term, making a significant decline unlikely. However, the pace of recovery in end-consumer demand will influence the extent of price increases, likely resulting in a stronger but fluctuating trend with limited upside, largely following futures and supply-demand dynamics.
In summary, while the Spring Festival holiday has begun and tourism-driven economic activity is rising, a recovery in soybean product consumption will take time. With little change in end-user demand during the holiday, the remaining grain volumes in northern and southern production areas are no longer comparable. Grain holders are advised to closely monitor future government policy support and fluctuations in imported soybean prices, seize opportunities to sell actively, and avoid excessive inventory buildup that could lead to market pressure once large volumes of imported soybeans arrive at ports. It is also recommended to keep an eye on provincial and national reserve purchase prices and the arrival dynamics of imported soybeans after the holiday.
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