Ample supply may pressure China's soybean meal prices before the Spring Festival.

In the middle and Foreign exchange dealer speculatorsearly December, China's soybean meal market experienced a "strong south, weak north" basis price divergence due to soybean clearance issues. As the supply of raw materials gradually recovers, the market's expectations for ample supply continue to rise. Despite some support from rigid demand, basis prices overall are still under significant pressure. Zhongchuang Information expects that the basis price of the Chinese soybean meal spot market will mainly exhibit weak fluctuations before the Lunar New Year, making an effective rebound difficult.

Strong South, Weak North: Amplified Regional Supply and Demand Differences

Since November, the ongoing fermentation of soybean clearance issues has disrupted the supply rhythm of raw materials and directly impacted the stability of upstream production plans. In December, the market focus gradually shifted from the north to the south. The South China region saw a rise in basis prices due to tightened supply, while the abundant supply and weak demand in the northern region exerted pressure on basis prices.

Data shows that in December, the basis price of soybean meal in South China surged from M2501+10 yuan/ton at the beginning of the month to M2501+200 yuan/ton, hitting a new high since April. In contrast, the basis price in Northeast and other northern regions dropped from M2501+90 yuan/ton to M2501+10 yuan/ton, hitting a four-month low. Regional differences in supply and demand structure have become the main factors affecting the trend of basis prices.

The tightened supply in the South China region is due to poor clearance of raw soybean, leading some enterprises to stop production and exacerbating regional supply and demand imbalances. Meanwhile, with the recovery of raw material supply and improved operating levels of enterprises in the northern region, the abundant supply is met with weak demand, further depressing basis prices.

Expectations of Ample Supply Restrain Price Rebound

Since December, soybean inventories have risen for two consecutive weeks, while soybean meal inventories have declined for two consecutive weeks, creating a divergence between raw and finished product inventories. According to Zhongchuang Information, by the 48th week, China's soybean inventory reached 5.9207 million tons, an increase of 1.0547 million tons from the beginning of the month, exceeding the level of the same period last year, while soybean meal inventory was only 593,000 tons, below the five-year average.

This divergent situation is mainly due to the delay in soybean clearance, which hindered the conversion of raw materials into soybean meal products. However, as the supply rhythm gradually recovers, expectations of ample soybean supply may support the rebound of enterprise production loads, thereby boosting soybean meal inventory growth and limiting the upward space of basis prices.

Pre-Lunar New Year Outlook: Mainly Weak Fluctuations

Looking ahead, although pre-Lunar New Year stocking by downstream sectors may provide some demand boost, the overall market still lacks substantial benefits, and the expectation of ample raw material supply continues to pressure soybean meal spot basis prices. Especially with regional supply and demand structure adjustments incomplete, the "strong south, weak north" pattern may persist in the short term.

Zhongchuang Information expects that before the Lunar New Year, the basis price of China's soybean meal spot market will continue to operate with weak fluctuations, making it difficult to achieve a significant rebound. The market needs to continuously monitor the downstream pre-holiday stocking process and further changes in raw material clearance conditions.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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