The domestic soybean market is approaching a critical transition period between old and new crops, characterized by a marked divergence in trends between futures and spot markets. Conflicting expectations regarding production volumes have fueled bullish sentiment in the futures market. Meanwhile, the continued release of state and provincial reserves (both domestic and imported) and the expanding market arrival of new-crop soybeans from the Yangtze River basin—with the peak harvest season fast approaching—have gradually exerted supply pressure on spot markets in both northern and southern producing regions.
Currently, the new soybean crop is developing well in both northern and southern regions, benefiting from adequate soil moisture and sunlight; despite differing estimates on planting acreage, production outlooks have improved. Speculation by external capital in the futures market has introduced certain risks; while the price advantage of soybeans from regions south of the Great Wall (central/southern China) has become apparent, overall market circulation remains sluggish. Soybean markets in the north and south are mutually constraining each other, and competitive selling makes it difficult for future market trends to break through current bottlenecks.
High-Volume Reserve Auctions; Futures Rally Stalled
Last week saw a simultaneous surge in the volume of domestic and imported soybean auctions. The state reserve released 102,000 tonnes of old-crop soybeans; the reserve price was raised to 4,700 RMB/tonne, and the entire lot sold at an average price of 4,753.5 RMB/tonne. Additionally, Heilongjiang provincial reserves released 72,000 tonnes (with 57,600 tonnes sold), and Jiusan Group sold 7,700 tonnes via competitive bidding. Total sales from policy-driven and corporate auctions of domestic soybeans reached 167,500 tonnes; a large portion of this supply was converted into futures delivery warehouse receipts, thereby bolstering spot market availability. Meanwhile, a dedicated auction for 360,000 tonnes of imported soybeans also saw a complete sell-through, providing a supplementary source of crushing raw materials alongside domestic spot soybeans.
Driven by expectations of a reduced new-crop harvest, the main "Soybean No. 1" futures contract briefly surged past the 5,100-point mark, fueled by strong bullish sentiment. However, the influx of large volumes of auctioned grain—combined with a sustained auction pace—increased the supply of circulating stock, curbing further gains in the futures market and raising the risk of volatility at high price levels. Futures market trends primarily influence psychological expectations rather than driving demand in the food-grade soybean market; although quotes in producing regions have risen slightly in tandem with futures prices, downstream acceptance remains low, and overall trading activity stays subdued. Promising Crop Growth Undermines Speculative Momentum
Driven by futures market trends, the diversion of spot soybeans in the Northeast production region has accelerated; however, rather than entering the processing sector, large volumes are flowing directly into futures delivery channels. Last week saw queues of trucks delivering grain to warehouses and a steady increase in the number of designated delivery points. While this appeared to alleviate pressure on traders, it essentially amounted to a "position rollover," with vast quantities of soybeans becoming year-end carryover inventory. Although quotes for high-protein soybeans rose in tandem—increasing by 100–160 RMB/tonne—actual trading remained sluggish, resulting in a price inversion where costs exceeded downstream market selling prices. Meanwhile, the accelerated release of soybean supplies from regions south of the Great Wall (offering distinct price advantages) has prompted end-market buyers to adopt a "wait-and-see" attitude.
Regarding crop development in the Northeast, expectations for a bumper harvest continue to strengthen. While there is debate over the extent of the acreage reduction, advancements in agricultural technology have significantly boosted yields; high-yielding varieties and supporting techniques are proving effective, and the fundamental conditions for yield in major growing areas are strong. Consequently, there is a disconnect between futures market speculation and actual production realities.
Despite a rise in commercial soybean prices, circulation remains sluggish. Quotes for premium commercial soybeans (43%–44% protein) range from 5,260 to 5,360 RMB/tonne—on par with the loading price of Northeast soybeans stored in regions south of the Great Wall. Significant differences in transportation costs are driving downstream buyers to opt for the latter.
Weather conditions in the Northeast have improved markedly of late; effective accumulated temperatures and optimal soil moisture are fostering soybean grain formation. This shift may impact the futures market, with the trading board showing signs of downward pressure this week.
Hubei’s New Crop Opens Strong; Sellers Eager to Move Old Stock
Weather conditions in the Yangtze River Basin have been highly favorable for soybean growth this year, with no sustained high temperatures. The quality of early-maturing varieties hitting the market shows none of the issues seen in previous years—such as "raisin-like" or "dark green" beans. Not only has the proportion of premium-grade beans risen significantly, but yields are also high, partially offsetting the expected drop in total output caused by reduced acreage. Thanks to upgraded sorting equipment among local buyers and a high proportion of high-protein beans, color-sorted commercial soybeans are attracting repeat customers, sustaining a market trend of high opening prices and continued upward momentum. As the harvest expands across production areas, high-quality soybeans (47%–48% protein) are priced at 6,700–6,760 RMB/tonne at the loading point, exerting significant pressure on soybeans with 45%–46% protein content. Last week, mainstream loading quotes for lower-protein soybeans (after color sorting) trended downward by 100 RMB/tonne. Soybeans planted in rapeseed stubble fields have begun to appear sporadically in areas such as Shishou, Gong'an, Jianli, and Jiangling; quotes across production regions are expected to diverge significantly later this week, potentially impacting high-price areas like Tianmen and Jingshan. Currently, some market players in Hubei still hold stocks of "old-crop" soybeans, inevitably facing losses. Although the planting of Hubei's mid-to-late-maturing soybean varieties was delayed by about two weeks compared to normal years—due to the late harvest of summer crops and rainfall—weather conditions during the growing season were superior to recent years, resulting in a substantial increase in the effective pod-setting rate. With favorable soil moisture and sunlight conditions for grain formation, yields per unit area are projected to rise by over 15% compared to historical averages. Medium- to long-term weather forecasts remain favorable; however, the peak market arrival period for Hubei soybeans (September 5–20) will coincide with the harvest in northern Hunan and the Anhui Yangtze River basin, creating downward pressure on prices.
Earlier, the Huaihe River regions of Henan and Anhui were affected by the outer circulation of Typhoon Dolphin, causing water damage in some low-lying areas and flood-diversion zones; however, the typhoon-induced rainfall and cooling temperatures generally benefited soybean growth across Jiangsu, Henan, and Anhui, resulting in robust crop development and higher-than-expected effective pod-setting rates. Procurement agents currently hold uneven inventories of "old-crop" soybeans; some large-scale traders still hold significant volumes. Notably, some early-harvested, high-moisture grain—which suffered from "red-eye" deterioration and strong odors—was originally warehoused at 4,400–4,800 RMB/tonne but now attracts no buyers even at 3,600 RMB/tonne.
"Speculative" Northeast soybeans are currently priced on par with spot soybeans from the region of origin; while traders are not incurring losses, profit margins have narrowed significantly. Commercial soybeans of above-average quality, previously priced at 5,200–5,300 RMB/tonne, are currently quoted at 4,600–4,700 RMB/tonne. Prices for high-quality beans vary significantly by region due to the sentiment of holders; the 5,000–5,200 RMB/tonne price point offers a strong competitive advantage over Northeast soybeans. While the circulation of these beans is expected to improve soon, the peak market arrival of new crops from the Yangtze River basin is fast approaching; therefore, it is advisable to sell promptly at market rates.
The quality of Hubei's new soybean crop is exceptional—a rarity in the last decade. As market volume increases, prices will inevitably decline, exerting significant downward pressure on high-priced varieties from Northern Jiangsu (such as "Da Ru Bai," "Hei Qi Wang," and "Cui Shan"). Currently quoted at 6,300–6,460 RMB/tonne, these Northern Jiangsu varieties are likely to drop to 5,900–6,000 RMB/tonne between late August and early September. In the short term, prices for "Za Hua" (mixed-variety) beans remain supported at 5,200–5,300 RMB/tonne, but holding onto them for long is not recommended.
Schools are set to reopen, and the diurnal temperature range will widen as the "Chu Fu" period (the end of the hottest summer days) passes. Vegetable supplies are decreasing noticeably, and with slight, across-the-board increases in meat, egg, and poultry prices, demand for soy products is expected to recover gradually starting in late August. However, surveys indicate that 60% of downstream operators have already secured sufficient stock for mid-to-late September; any future shortages of specific varieties can be addressed through minor inventory adjustments. The restocking cycle for essential-demand buyers coincides with the arrival of the new crop; brief bursts of terminal market activity are unlikely to clear existing inventories from both Northern and Southern production regions. While Northeast soybeans can be carried over to the next marketing year without compromising quality, natural conditions in regions south of the Great Wall (Guannei) do not allow for this, resulting in continued price volatility. (Source: Grain and Oil Market News)
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