US soyabean prices rose 7% during the month of September, supported by firm Chinese demand and falling crop ratings. Prices peaked on 18th September at USD 384/MT, the highest level held in two years, before easing to USD 377/MT on 30th September. The average soyabean price for the month was USD 368/MT, a rise of 11% m-o-m and 12% y-o-y.
Chinese summertime demand for soyabean products has been unusually high due to adverse weather affecting Chinese crop production. China is also striving to rebuild its swine herd that was decimated by African Swine Fever in 2018, thus supporting firm soyabean meal demand. Total Chinese soyabean crushing for the 2019/20 (Sep-Aug) season was 90.5 million tonnes, an increase of 7% y-o-y, according to the United State Department of Agriculture (USDA). Chinese soyabean crushing for the 2020/21 season is forecast to increase further to 98 million tonnes, implying continued firm import demand.
The US-China Phase One agreement signed in January 2020 also provided strong impetus for US soyabean exports to China. Under the trade deal, China is expected to purchase more than 43 million tonnes of US soyabeans over 2020. Total US soyabean exports for the 2020/21 marketing year are forecast at 58 million tonnes, a r 26% y-o-y increase, according to the USDA. As of 17th September 2020, US soybean export sales are estimated at 35.5 million tonnes, soaring 192% y-o-y. According to trade reports, the majority of purchases were made by state-owned Chinese companies.
The USDA also reported that 20% of the total US soybean crop has been harvested as of 27th September, higher than the five-year average of 15% for the period. Despite the speed of harvesting, the US soybean crop condition has fallen 10% in a matter of weeks due adverse weather. Overall, 64% of the soyabean crop is rated good-to-excellent. A lower soybean crop rating signals a smaller yield, which could lower supply expectations and provide support for prices.