BEIJING, Sept. 23 (Xinhua Finance) -- The Chicago soybean futures on the night of the news that Argentina will temporarily exempt some agricultural product exports tariffs fell to a six-week low of 1000 U.S. cents/bushel, testing the support level again.

The drag of weakening costs has a significant impact on the domestic oilseeds sector. As of the morning close on the 23rd, soybeans fell by more than 4%, and palm oil, soybean oil, soybean meal, and rapeseed meal all fell by more than 3%.

Market analysis suggests that Argentina's duty-free policy for agricultural product exports will exacerbate the weakening pressure faced by the short-term oil meal market. However, for the domestic market, although the bearish pressure remains, there are still positive factors, and the overall decline in meal prices may be limited.

Argentina Halts Tax on Grain Exports; Global Bean Market Reeled

Argentina is the world's largest exporter of soybean oil and soybean meal. It was reported that on September 22, the Argentine government announced a temporary suspension of export tariffs on agricultural products such as soybeans, soybean oil, soybean meal, corn, and wheat until October 31, with a total export value of $7 billion. This means that the export tariffs on Argentine soybeans, soybean oil, and soybean meal will be temporarily reduced to 0% from the current 26%, 24.5%, respectively. This move is widely seen as enhancing the competitiveness of Argentina's related agricultural products, while also intensifying the pressure on US soybean exports.

"Argentina's temporary tariff-free policy will make Argentine agricultural products highly competitive, increasing the export pressure on the already stressed US bean market due to the lack of Chinese purchases," Guotai Junan Futures commented.

Dongzheng Futures further stated that Argentina's soybean harvest is abundant this year, and the suspension of export taxes will help boost exports. At the same time, China has already purchased several ships of Argentine soybean meal, and Steel Union data shows that China's imports of Argentine soybean meal are still theoretically profitable at present.

Currently, the harvesting period of US soybeans has begun, and the export impact has further suppressed the futures price of US soybeans. Looking at the chart, on Monday (September 22nd), the futures price of Chicago soybeans fell for the fourth consecutive trading day, and the decline expanded to nearly 1.4%. On the 23rd, during the Asian electronic trading session, the futures price of US soybeans further declined, and as of the time of writing, the lowest point reached 1005.25 US cents per bushel, setting a new low in over six weeks.

The decline in the futures price of US soybeans directly led to a decrease in the cost of imported soybeans in China, which in turn weakened the cost support for oil meals. Industry tracking data show that under the impact of the decline in US soybean prices, the theoretical cost of imported soybeans in China on September 23rd fell comprehensively, especially the import cost of Argentine soybeans, which fell significantly. Data show that on September 23rd, the import cost price of US soybeans was 4437 RMB, down 52 RMB from the previous day; the import cost price of Brazilian soybeans was 3958 RMB, down 29 RMB from the previous day; while the import cost price of Argentine soybeans was only 3682 RMB, down 66 RMB from the previous day.

Support factors are faintly discernible

However, although the oil-seed varieties fell significantly under the impact of the news, there are also short-term support factors in the soybean market.

From the overseas market perspective, the drought weather in the production area has led to a decline in the excellent rate of US soybeans and a slow harvesting progress, which has supported to some extent. The latest crop growth report from the US Department of Agriculture shows that as of the week ending September 21, the excellent rate of US soybeans was 61%, which is lower than market expectations and down from 63% in the previous week. The harvesting rate of US soybeans during the same period was also only 9%, slower than the market expected 12%.

In this context, Guotai Junan Futures judges that in the later period, soybeans are still in a state of consolidation, the global supply is sufficient without a bull market foundation, and the current bean prices are gradually approaching the Brazilian planting cost, it is difficult to continue to fall, and at the same time, Argentine farmers are more inclined to hold spot for hedging to combat inflation, the beans that can flow into the global market on a large scale are limited, and more reflect emotional impact.

Greenland said that although the trade environment is difficult to improve in the short term, the demand for US soybean exports is worrying, and the US soybeans are entering the harvest and listing period, the seasonal pressure is showing, and the US soybean futures price is under pressure, but the Brazilian discount has stopped falling and rebounded.

Looking at the domestic market, the superposition of the double holiday inventory and the rebound of the protein meal futures price in the first two trading days supported the recovery of spot transactions. The tracking of the China Grain and Oil Business Network showed that on September 22, the domestic mainstream oil factory bean meal transactions continued to recover, with a volume of 185,700 tons, an increase of 86,700 tons compared to the previous day, reaching a one-week high; the average transaction price was 30,255.6 RMB/ton, an increase of 188.3 RMB/ton compared to the previous day. Shanghai Steel Network's statistics also showed that on September 22, the national main oil factory soybean meal transactions reached 166,600 tons, an increase of 67,500 tons compared to the previous trading day.

And with the National Day holiday approaching, the holiday transportation may be affected, which is also seen as a supporting factor for domestic soybean meal prices. Rda Futures said that although most oil mills maintain production during the National Day holiday, the market supply is temporarily relaxed, and the meal inventory of oil mills is high and continues to urge for delivery. However, due to the difficulty in finding trucks during the holiday and the low prices of some traders to replenish goods to ensure the supply after the holiday, the room for the continuous decline of the spot price of soybean meal is limited.

Donghai Futures further stated that it is expected that the soybean meal market will gradually stabilize by the end of September and October. The reasons are as follows: on the one hand, the overall supply and demand in the fourth quarter will contract, and the high cost of imported soybeans and the weakness of vegetable oil will strengthen the support logic for soybean meal costs; on the other hand, the current high yield level of US soybeans is expected to be adjusted downward. If the US Department of Agriculture fulfills this adjustment, it may further ease the pressure on the export end, thus making US soybeans strong and easy to rebound, and the demand for soybean meal may increase.

As an integrated internet platform providing benchmark prices; On September 25th, the benchmark price of soybean oil by SunSirs was 8,178.00 RMB per ton, a decrease of 2.97% compared with the beginning of this month (8,428.00 RMB per ton).

On September 25th, the benchmark price of soybean meal by SunSirs was 2,988.00 RMB per ton, a decrease of 3.68% compared with the beginning of this month (3,102.00 RMB per ton).

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