Market Intel

Beans & China, Rumor vs. Fact

“Buy the rumor and sell the fact.” The soy market continues to blow up-down-sideways in the rumor-fact wind.

The fact is China made huge purchases of South American soybeans earlier this year. China-based reporting points to current significant oversupply at ports and in government-controlled stockpiles. Crushers are coping with negative margins. 

However, another fact is China suspended retaliatory tariffs, which ought to make U.S. beans more attractive.

But while last month’s Trump-Xi meeting resulted in the White House news that China had agreed to buy 12 million tons of U.S. beans by year-end, the fact of exports has a long way to go this month to catch up with the rumor. Bookings are lagging for both December and January shipments.

Soybean meal: Rumor-rich soy trade numbers are harder for the market to digest, but that doesn’t prevent them getting baked into prices. SBM prices are down somewhat at this writing, although basis remains steady. Likewise for other soy protein products and canola meal.

Palm & bypass fat products: Going into last month, crude palm oil futures in Malaysia (world’s No. 2 supplier) dropped significantly, Market Intel sources report, thanks in part to weak pricing of soy oil and other veg oils plus large domestic inventories. Meanwhile, Indonesia (No. 1 supplier) has continued to roll out its national biodiesel pilot project, with full implementation expected next year. Sources expect tighter regional supplies.

Now, with lower palm and calcium salt prices — along with more economical ocean freight rates and steadier tariffs — palm products are becoming more attractive in dairy diets.

Amino acids: Sources report “no whisper in the wind” for a final resolution of the European Union’s lysine anti-dumping ruling against China. Meanwhile, lysine along with tryptophan and threonine are in good supply with prices continuing to soften into Q1. DL methionine prices are steady.  

Vitamins: Likewise, there are good supplies of most vitamins, with vitamin A prices close to bottoming out, but with room for decline in prices of vitamin E and vitamin D₃.

The cost of most micro ingredients coming from China may be softening a bit thanks to lower ocean freight rates.

Trace minerals: There’s lower pricing for both copper sulfate and tribasic copper chloride (TBCC). Zinc sulfate prices are steady, even with fertilizer season closer.

Blood products: Prices this year are not following the usual holiday rise, although there’s a bit of an uptick with Thanksgiving. Relatively low cost SBM and lower milk prices are keeping a lid on. Meat processing labor challenges appear to be less problematic.

P & K: Prices for phosphates are steadier along with potassium chloride (KCl) and magnesium oxide (MgO).

Distillers: DDGS prices may be creeping up. Basis and futures prices are up for corn, and there’s higher VOM mycotoxin in some parts of the Tri-State.

Wheat midds: There’s been a significant drop in prices — down $20-25 per ton — as processing has geared back up from earlier shutdowns.

Soy hulls: Prices continue to weaken with ready availability. Sources suggest prices are “firming the drop” of the past few months.

Over the horizon… These days there’s a lot more on-farm grain storage capacity. Dairy producers who grow grain appear to be tucking more away for later use or sale.

Coming soon: December WASDE Report.

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