Is Soybean going to trade Up or waiting for fresh Fall in World Market? Know the Fundamentals

Is soybean going to trade up in near future ? Do Current Supply and Demand Fundamentals allow any major price rise? or will it continue to trade sideways to weak?

From July 2014 to till date, the soybean prices in the international market  (CBOT Soybean) have fallen by nearly 28%. It is to be seen how much downside is still there. 


Here an analysis is made to know all these factors. 
World Soybean Supply and Demand Fundamentals : 2014-15: 
If we look at the market fundamentals, It appears that no major upside is expected in near future.

The later months of April, May and June will decide the long term trend depending upon the sowing progress in its major growing countries.

Let us have a look at the current supply and demand fundamentals of the World Soybean Market.

The data for Analysis is taken from FAS, USDA.

Top exporting nations and world is estimated to have significant increment in supply as well as ending stocks as compared to major importing nations during 2014-15 vs 2013-14. [Table 1 & Fig. 1]

World Soybean Supply Scenario: 2014-15 vs 2013-14

Bearish Supply Fundamentals [Table 2 & Fig. 2]

1. The Beginning Stocks higher by 16%.

2. Production higher by 11%.

3. Imports higher by 3%.

4. TOTAL SUPPLY HIGHER BY 10%  as compared to 2013-14, & 18% vs 2012-13.

5. Exports higher by only 4%.

6. Crush higher by 6%.

7. Consumption higher by 6%.

8. ENDING STOCKS HIGHER BY 35%. vs 2013-14, and by 56%  higher vs 2012-13.

9. Stock to use ratio (stock/total domestic consumption) has increased indicating that the pace of increment in consumption is slow as compared to addition in stock.

Supply Scenario in 2014-15 for the Major Soybean Exporters

US, Brazil and Argentina are the three major countries accounting for around 88% of the total world's soybean exports.

Comparative changes in Demand and Supply are presented in the Table 3 & Fig. 3 for major exporters and world.

1. Total supply is 12% more in these three top exporters as compared to world where total supply is more by 10%.

2. United State (US) which is the biggest exporter of the soybean has 14% higher supplies as compared to last year.

3. For 2014-15, in US, the production, supplies, and ending stocks are high by  18, 14 and 319 % respectively as compared to 2013-14.

4. On the cummulative basis, the ending stocks of these top three exporters are significantly high by 46% as compared to 2013-14. World ending stocks are up by 35%.

Demand and Supply Scenario in the Top 10 Importing Nations.

[Table 4]

1. China: It's Production, Imports, total Supply, Domestic Consumption and Ending Stocks are estimated to change by 1, 5, 6,7 and -1% respectively during 2014-15 vs 2013-14. All this means that consumption has increased and ending stocks will fall. This will result into increased demand for the 2015-16.

2. European Union: This is the second largest country in term of imports. Due to significant rise in the production (40%), the imports are estimated to reduce by 2%. In the absence of rise in consumption, its ending stocks are estimated to rise significantly by 57%.

3. Imports are estimated to remain low for countries like Japan, Taiwan, Turkey.

All the analysis made here suggest that there seems no major uptrend in soybean in near future.

However, as we stated in the introduction section, that a lot will depend upon the assessment of sown area in the major soybean growing countries in next season particularly in India where sown area is largely dependent upon monsoon rains and a lot of fluctuation in prices might be seen from May onward in prices if there is any disruption in the monsoon progress. 

So in short to medium term, weakness might persists, but to judge the long term movement, we have to wait for two months.

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Suggestions and opinions are welcome.