Can soybeans rise further? Limited upside room in the domestic market

First, domestic port stocks of imported soybeans remain high. According to statistics from relevant institutions, as of the week of September 19, China's port inventory of imported soybeans was about 6.57 million tonnes, slightly higher by 30,000 tonnes than at the beginning of September, above the 6.28 million tonnes of the same period last year, and above the 6.39 million tonnes average for the same period over the past 5 years.

Second, overall spot trading in the domestic market is sluggish. According to statistics, on September 20, US West Coast soybeans at Rizhao Port were quoted at around 3,680-3,700 yuan/tonne, with no quote for US Gulf soybeans; US West Coast soybeans at Qingdao Port were quoted at 3,700-3,720 yuan/tonne, with port trading generally weak. In addition, soybeans in the Heilongjiang production area also showed sluggish trading, with purchase and sales conditions relatively stable. It is understood that remaining grain in most areas is basically at its bottom, and traders have stopped purchasing, waiting for new soybeans to come onto the market. The market expects that a small amount of new soybeans will begin to appear sporadically in mid-to-late September, and will increase noticeably only after October, with the current overall attitude being one of waiting and seeing.

Finally, auctioned soybeans from temporary reserves increase supply. After study and decision by the relevant national departments, on September 23, the auction of soybeans from temporary reserves proceeded as normal, with the auction volume still 600,000 tonnes, for the crop years 2012 and 2013, in the Heilongjiang and Inner Mongolia regions. Auctioned soybeans from temporary reserves will continue to increase soybean supply, creating pressure on soybean price increases.

In summary, soybean harvests in both China and the United States are approaching, and expectations of a bumper crop are tending to become clearer. At the same time, factors such as high domestic port stocks of imported soybeans, overall sluggish spot trading, and increased supply from state reserve soybean auctions have limited the room for soybeans to move higher.