Anhui Soybeans Open at Low Prices, Northeast Soybeans Ignored
As the National Day holiday comes to an end, autumn is at its peak and the weather is turning cooler, and domestic grain has started a round of price-cutting frenzy. It is understood that this year, due to reasons such as the large domestic corn planting area and ample output, new-season corn prices will be lowered somewhat; at the same time, wheat, due to rumors of a lowered procurement and storage price and other reasons, has seen a “cliff-like” price slide; soybeans have also been unable to escape the “misfortune” of price cuts. After large quantities of new soybeans came onto the market, affected by factors such as planting area, output levels, soybean quality, and market demand, soybean prices have fallen to varying degrees. Below, let us talk about how domestic soybeans began their “journey of price cuts.”
Increased output, Anhui soybeans open at low prices
Soybeans are one of the main summer crops planted by farmers in Anhui Province. According to incomplete statistics, this year Fuyang City in Anhui has 1.8 million mu of soybean area, and Suzhou City has 1.56 million mu of soybean planting area this year. Thanks to the farmers' diligent cultivation and favorable weather, this year Anhui's soybean yield per mu has increased compared with last year, with yield per mu in most areas approaching 400 jin. This means that although Anhui's soybean planting area has decreased this year, overall output is estimated to be about the same as last year's total output. It is understood that this year Anhui Province's soybean output reached 1.1 million tons, only 40,000 tons less than last year, a decrease of 3.48%.
As of October 10, Anhui soybean prices were stable with a downward bias, with the loaded-truck price of cleaned grain at around 2.0 yuan/jin. Compared with the same period last year, Anhui's soybean market is weakening, mainly due to the following two reasons: First, affected by this year's Hubei soybean market, traders are pressuring prices to buy. From August to September this year, under the influence of the overall sluggish domestic environment, increased output, weak market demand and other reasons, Hubei soybean prices showed a “high open, low go” trend, which is very similar to the current Anhui soybean market. To avoid repeating the same mistakes, some traders in Anhui are pressuring prices to buy. Second, as the saying goes, “things are precious when they are rare,” but this year Anhui's soybeans have had a bumper harvest, and combined with weak market demand, this has pushed soybean prices down. From August to September, the southern soybean market had already purchased large quantities of Hubei soybeans and imported soybeans, and inventories remained high for a long time, but market demand was weak and soybean inventory was consumed slowly, so purchasing of Anhui soybeans was not as active as imagined.
From the perspective of the national soybean situation, Anhui's low prices directly affect Northeast soybean prices, and in competition with Anhui soybeans, Northeast soybeans are already at a disadvantage.
Quality decline, Northeast soybeans ignored
According to the National Bureau of Statistics, in October 2015, the soybean output of the three Northeast provinces was 5.01 million tons, a decrease of 1.01 million tons compared with the previous year's soybean output of 6.02 million tons, a decrease of 16.7%. Among them, in October 2015, Heilongjiang had the highest output at 3.7 million tons, a decrease of 904,000 tons compared with the previous year's soybean output of 4.064 million tons, a decrease of 22.2%. During this year's soybean planting period in the Northeast production areas, there was low temperature, little sunshine, and more rainy weather, which seriously affected the quality of this year's Northeast soybeans, leaving no support for Northeast production area soybean prices to rise. As of October 12, the loaded-truck price range for cleaned Heilongjiang soybeans was between 2.05-2.10 yuan/jin, which is no price gap at all with Anhui soybean outbound loaded-truck prices, and even shows an inversion, causing Northeast soybean sales to stall.
Based on past years' experience, the price of Anhui soybeans and Northeast soybeans should differ by at least 2 mao; otherwise, Northeast soybeans have no competitiveness at all. This year's Northeast soybean quality is not ideal, and compared with Anhui soybeans it has no advantage at all. Many grain-using enterprises in Liaoning, Shandong and other places have shifted their purchasing targets to Anhui and other places. Ms. Luan, who has been engaged in soybean trading in Inner Mongolia for many years, told this author, “In previous years, in the early stage of soybean harvesting, many customers would call to ask about prices, but this year Northeast soybean quality is average, and not even people asking about prices have shown up.” At present, Northeast soybeans have almost reached the point of being ignored, with traders in various places generally reporting that Northeast soybeans have high moisture content, relatively low protein content, and serious insect damage; the decline in quality and weak demand have seriously affected the shipment volume of the Northeast soybean market.
In summary, under the premise of an overall sluggish economy this year, domestic soybeans are falling into a period of adjustment. At the current stage, market demand is weak. Around September, various purchasing entities bought large quantities of Hubei beans and imported soybeans, and inventories have remained saturated and slow to be consumed, with prices continuing to weaken. Through communication with traders in many places, this author understands that judging from the current inventory consumption and shipment volume of grain-using enterprises, a restocking cycle is very likely to appear in mid-to-late November. At that time, the improvement in demand and favorable factors such as a decline in soybean moisture content will cause domestic soybean prices to recover somewhat. However, the expected price increase is limited, and the possibility of soybean prices showing a sustained upward trend in the short term is relatively low; they will still be in low-level fluctuation.