According to the Ministry of Agriculture of China, in a statement released on Thursday 16th March, China is set to boost domestic purchase of soybean in a bid to incentivise farmers to keep planting the crop and “prevent farmers who have been lifted out of poverty from falling back.” While plans to increase planting of this crop were initiated about a year ago, higher domestic prices compared to the prices of imported beans prevented farmers from being able to sell off their crop. The ministry highlighted various steps to ensure both domestic production and purchase. These include increasing subsidies for producers and plans to purchase home-grown beans in its key growing areas – Heilongjiang province and Inner Mongolia – for its state reserves.
Globally, South American weather conditions remain the major sentiment driver in the soybean market. Following a downward revision of the Argentinian soybean crop to 29 million metric tonnes by the Buenos Aires Grain Exchange (BAGE) on 9th March, further cuts to the estimate were made on Thursday. The latest estimate pegs the crop at 25 million metric tonnes, now lower than the Rosario Board of Trade’s (BCR) latest estimate of 27 million metric tonnes and reaching the lower range of market participants’ expectations (25-27 million metric tonnes). The severe drought, which is showing no sign of improvement, has continued to pummel the Argentinian crop this season. Consequently, the CBOT soybean futures price (Mar-23) climbed marginally by 0.1% to USc 1,476/60 lb bushels, following BAGE’s cut. The Mintec Benchmark Prices (MBP) for soybean oil FOB Argentina also rose on the same day, up by 1% to $1,058/MT compared to the previous day’s assessment. However, sustained expectations of the record Brazilian crop and recent complications in the US banking sector, with the collapse of two major banks, limited further upside price movements this week.