Does the change in soybean area in the United States lead to another increase in soybean meal prices?

The June supply and demand report of the US Department of Agriculture will be released on June 12, 2024 Eastern Time (early morning of the 13th Beijing Time). The report mainly adjusts the supply and demand of old season crops in 2024/2025, and generally does not make significant adjustments to the supply and demand of new season crops in 2025/226. For the global soybean market (4521, -21.00, -0.46%), the focus should be on the adjustment of soybean supply and demand in South America in 2024/2025.
There is not much room for adjustment in soybean production in South America
From the perspective of the South American market, the high soybean yield in Brazil in 2024/2025 has basically been achieved, while there is still a possibility of a slight decrease in soybean production in Argentina. Overall, it does not affect the record high yield expectations for South American soybeans in 2024/2025. The previous May USDA supply and demand report maintained Brazil’s record soybean production of 169 million tons for 2024/2025.
In a report released on Monday, StoneX adjusted Brazil’s soybean production for 2024/2025 to 168.25 million tons. Agricultural consulting firm AgRural also raised Brazil’s soybean production to 169 million tons this week. At present, the soybean harvest in Brazil has been completed, and the high yield has basically reached about 169 million tons. The June USDA supply and demand report is expected to have little room for adjustment in its production.
Due to the continued prevalence of US trade protectionism and the announcement at the end of May to increase tariffs on imported steel from 25% to 50%, the fluctuation of US China trade and US European relations may make Brazilian soybeans more in demand. The June USDA supply and demand report is expected to slightly increase Brazilian soybean exports.
At present, Argentine soybeans are in the final stage of harvesting. In May, heavy rainfall occurred in Buenos Aires Province, causing flooding in some areas, resulting in a slow overall harvesting progress. According to multiple institutions’ predictions, it may affect the production of 1.5 to 3 million tons. Currently, there is a decrease in rainfall in Argentina, which is beneficial for the subsequent soybean harvest. As a result, the June USDA supply and demand report is expected to lower Argentina’s soybean production for 2024/2025 from 49 million tons to around 48 million tons.
The May USDA supply and demand report for the first time estimated the supply and demand situation of the new season soybean market in 2025/26, and adjusted the soybean production of Brazil, Argentina, and Paraguay to 175 million tons, 48.5 million tons, and 11 million tons respectively, once again breaking historical records. However, it is too early to discuss the production of South American soybeans that have not yet been sown.
Meidou focuses on the end of month area report
From the perspective of the US market, the current planting progress is faster than previous years, and the excellent rate is basically the same as the average of previous years. It is expected that the June USDA supply and demand report will not make significant adjustments to the new season of US soybeans. Currently nearing the end of soybean planting, the US Department of Agriculture’s Crop Progress Weekly report shows that as of the week of June 1st, the progress of soybean planting in the US was 84%, compared to 76% last week and 77% in the same period last year, with a five-year average of 80%.
This spring, the progress of soybean planting in the United States has been ahead of the five-year average, and overall planting has been relatively smooth. In the absence of extreme weather during the current sowing period, the USDA generally does not make significant adjustments to the production of new soybeans in June.
According to NOAA data, the probability of La Ni ñ a occurring this summer is low, and it is stated that ENSO neutrality will continue until the northern hemisphere summer and early autumn of 2025. The author believes that this does not necessarily mean that the growth period of adzuki beans will be smooth sailing. As the impact of stratospheric warming diminishes at the end of spring, a dynamic pattern of high in the west and low in the east will form in North America in early June. It may lead to high temperatures and droughts in the Midwest of the United States, while the East may experience unstable conditions of mild temperatures and increased rainfall. The situation of ‘hot weather in the west and rainy weather in the east’ may still make the growth of American soybeans less smooth.
The later USDA supply and demand report may be adjusted around the yield of US soybeans, but the June USDA supply and demand report is expected to continue the supply and demand expectations reported in May and will not make significant adjustments.
At the end of June, the US Department of Agriculture will release the 2025/26 soybean planting area report. At this time, the planting of US soybeans is also coming to an end, and the area report will lay the foundation for US soybean production. Subsequently, the US soybean market will also enter a weather trading node.
The impact of the area report at the end of June on the market is generally much greater than that of the supply and demand report in mid June. It is expected that the June supply and demand report will have a neutral impact, and the market is waiting for guidance from the end of June area report. It is necessary to follow up on the soybean planting situation in the United States in the near future.
In terms of demand, there are still fluctuations in the US firewood policy and US China trade relations. Under the influence of uncertain factors, it is expected that the June USDA supply and demand report will not significantly adjust the consumption and export situation of US soybean crushing.
Expected to see a bottoming out and rebound in soybean meal prices (3111, 18.00, 0.58%) in the near future
From the perspective of the domestic market, the June USDA supply and demand report is expected to have a neutral to bullish impact. China’s soybean meal prices are expected to bottom out and rebound in the near future, and we still have a positive outlook on soybean meal prices in the medium to long term.
The overall supply side of the soybean meal market presents a pattern of “weak reality+strong expectations”. The “weak reality” is mainly reflected in the large amount of imported soybeans from April to May, which led to the rapid accumulation of soybean inventories; The ‘strong reality’ is manifested in the slow buying of soybean ships from August to September after China’s oil factories have restrained their profit extraction.
From the demand side, the price difference between soybean and vegetable meal (2479, 38.00, 1.56%) has converged, and the proportion of soybean meal added to feed is expected to rebound. Coupled with multiple factors such as aquatic seedling feeding and seasonal poultry stocking, the feed demand for soybean meal continues to rise month on month.
Overall, the arrival volume of soybeans at ports in the second and third quarters will significantly increase compared to the previous quarter, but there will still be a slight decrease compared to the same period last year; However, the demand for soybean meal may reach its peak in the third quarter, and the possibility of further easing the supply and demand of soybean meal in China is not high. After a significant reduction in the planting area of American soybeans in 2025/226, there is a strong expectation for weather premium trading, and soybean meal is expected to resonate with American soybeans and strengthen at that time.
From a rhythm perspective, it is expected that soybean meal will continue to bottom out in June, but the price center is expected to shift slightly upwards, and there is a high probability of further increase after July.