Soybean 2016 Price Market Analysis: Year-End Trend Still Has Room to Rise

How will soybean prices trend at the end of 2016? News from December 6: Last week, US soybean futures surged and then fell back. The main January contract touched a high of 1065 cents on Monday. Because it had risen for 7 consecutive trading days, the technical side needed a pullback correction. At the same time, on the fundamentals side, Brazil's soybean production was expected to hit a record, South American crop planting was proceeding smoothly, and growing conditions were good, so the market worried that later demand would shift to the South American market. Combined with end-of-month position adjustment, speculators liquidated long positions built up over the past several months. On Friday, the January soybean futures contract closed down 1.25 cents at 1028.5 cents per bushel.

Dalian soybean futures performed more strongly than overseas markets during the week, with the board rising sharply. The main 1705 contract hit its highest level since May 2015, and the board trend remained firm, continuing to give a boost to domestic spot soybeans. In the Northeast production areas, the amount of soybeans with relatively better quality was becoming smaller and smaller, and the willingness to hold prices firm was strong. At the same time, grain depots and oil companies generally raised their purchase prices. Quotes for soybeans in Henan and Anhui were relatively chaotic, and the price gap between good and poor soybeans further widened. Imported distribution soybeans trended firmly, most ports had no goods, and pickup speed was slow.

The board continued to strengthen, driving the center of domestic commercial soybean prices slowly upward.Looking ahead, in the Northeast region, although soybean production in the Northeast production areas increased overall this year, because the disaster situation was severe, the proportion of soybeans with high protein content dropped sharply. As the market continuously purchased and stocked up recently, the amount of good soybeans became smaller and smaller. After prices rose slightly, farmers were even more reluctant to sell and held prices firm.In addition, China Grain Reserves Corporation grain depots and oil companies raised purchase prices, which stimulated Northeast soybeans. The short-term trend remained relatively strong, and the center of gravity might still rise slightly. However, on the demand side, because freight costs rose sharply, it was difficult to improve soybean out-of-region sales, so the room for price increases before the New Year would still be limited.

Soybean prices in Henan and Anhui recently mostly tended to stabilize. For good soybeans, because snow earlier made it impossible to collect goods at the grassroots level, and at the same time driven by the general rise in Northeast and imported distribution soybean prices, prices remained at a high level. However, transport capacity was tight, and some areas began restricting loading. Prices for soybeans of relatively poorer quality were stable or fluctuated slightly. Because good soybean prices were on the high side, procurement demand in the South slowed, and actual trading remained relatively light. Freight costs rose sharply, and vehicles were tight, causing traders to purchase cautiously. The volume of goods on the market was not large, especially for soybeans of better quality, and all parties had a strong reluctance to sell.Recently, demand in the South was average, and purchasers' purchase volumes declined. At present, market quotes were relatively chaotic. Good soybean prices were 2.25-2.27 yuan/jin for loading, but actual demand was limited. In most areas, the mainstream soybean price in Anhui remained near 2.22-2.23 yuan/jin, while prices in Henan were 2.18-2.21 yuan/jin. Short-term price trends were stabilizing or adjusting at high levels.Imported distribution soybeans held steady at high levels. Because soybean arrival at ports was delayed, some ports lacked goods. Later, as arrivals increased, they might come under pressure again.