SunSirs: Analysis of Domestic Soybean Meal Market Trends in March-April

Following the Spring Festival, the domestic soybean meal market presented a complex picture: Overseas U.S. soybean prices fluctuated at elevated levels, supported by expectations for biodiesel consumption and shifts in Brazil's export pace, providing cost-side traction for the domestic market. However, the domestic spot market exhibited a pronounced “futures-spot divergence”—with distant-month futures remaining relatively firm while spot basis continued to weaken, accompanied by subdued market activity. As the traditionally sensitive period of March approaches, this article provides a multi-dimensional systematic analysis of the soybean meal market for March-April.

I. International Soybean Market: High-Level Volatility Amidst Mixed Sentiment

The current US soybean main contract maintains a high-level oscillation within the 1140-1160 cents/bushel range, with pronounced characteristics of bull-bear competition in the market. From the perspective of supporting factors, expectations for US biodiesel consumption continue to ferment, providing long-term positive support for US soybean crushing demand. Brazil's soybean export pace has fallen short of expectations, with February export estimates being lowered coupled with occasional port shipment disruptions, triggering market concerns about short-term supply. Additionally, strong market expectations for renewed Chinese purchases of U.S. soybeans have injected some upward pressure into the market. However, upside resistance remains significant: Brazil's bumper crop is gradually materializing, with major agencies maintaining high production estimates; expectations for expanded U.S. soybean planting area to 85 million acres in the new season point to looser future supply; coupled with uncertainties stemming from tariff policies, these factors further cap the market's upside potential. Overall, the international soybean market is unlikely to develop a clear trend in the near term. The pattern of high-level consolidation will provide directional guidance and cost-side support for the domestic soybean meal market, but it is unlikely to constitute an independent, unidirectional driver.

II. Domestic Supply Side: The Tug-of-War Between Tightening Expectations and Actual Improvements

Supply dynamics remain the core focus. Pre-Spring Festival concerns over delayed Brazilian shipments due to rainfall fueled expectations of tight arrivals in March-April. However, latest data shows that as of February 24, Brazil's shipments to China in February exceeded 5 million tons, matching last year's levels and effectively restoring April arrival expectations, cooling earlier bullish sentiment.

Based on estimated shipping schedules, domestic soybean arrivals for February-April are projected at 3.4 million tons, 1.5 million tons, and 6.65 million tons, respectively; crushing volumes are expected at 5.6 million tons, 6.8 million tons, and 7.5 million tons. Consequently, soybean ending stocks from February to April are projected to decline before rising: falling to 6.16 million tons by late February, further decreasing to 3.86 million tons in March, and rebounding to 4.01 million tons in April. This implies domestic soybean inventories may retreat to a relatively low level of around 4 million tons in March-April, potentially leading to a phase of tight supply.

However, it is important to note that this projection is not definitive. First, auctions serve as a key regulatory variable; increased supply releases in the later period could effectively replenish stocks. Second, uncertainty persists regarding Brazilian shipments, with port logistics and customs clearance speeds potentially disrupting actual arrivals. Core observation points on the supply side include: oil mill operating rates, the sustainability of Brazilian shipments, auction trends, and changes in customs clearance policies.

III. Domestic Demand Side: Root Causes of Weak Purchasing Sentiment and Recovery Pathways

In contrast to the mixed signals on the supply side, the demand side exhibits clear signs of weakness. Post-holiday spot market activity has been subdued, with downstream buyers showing generally low purchasing intent—many inquiries but few transactions. Three primary reasons account for this: First, physical inventories at the end-user level remain ample. The period before the Lantern Festival is a traditional off-season, and pre-holiday stockpiling has not yet been fully absorbed. Most enterprises' inventories can sustain operations until mid-to-late March. Second, locked positions for March-April contracts dampen procurement enthusiasm. Some enterprises signed forward contracts before the holiday, eliminating immediate need for additional purchases. Third, significant resistance to current high-priced goods. As futures prices strengthened, spot fixed prices rose passively. Downstream players perceive prices as excessive, leading to weak buying interest and a stalemate of cautious observation.

Against this backdrop, spot basis differentials have continued to weaken. Taking East China as an example, some spot basis quotes have fallen below 200 /ton. This stems partly from sluggish end-user procurement and partly from a shift in trader sentiment—traders holding spot positions actively locked in profits and offloaded inventory during the futures rally, proactively lowering prices to mitigate risks, further intensifying downward pressure on the basis. Notably, the current spot weakness does not indicate vanished demand but rather deferred demand. As downstream physical inventories gradually deplete and the traditional restocking window approaches in mid-to-late March, terminal purchasing sentiment may recover. However, the extent and timing of this recovery depend on whether prices can retreat to levels attractive enough to draw buyers back into the market, and whether expectations of tight supply can be substantially realized at the spot level.

IV. Market Structure and Price Outlook: Operating Range Amidst Divergence

Comprehensive analysis indicates that the domestic soybean meal market will exhibit pronounced divergence from March to April. In the short term, spot basis will remain under pressure. On one hand, February soybean arrivals remain adequate, and oil mills are gradually resuming operations, leaving no immediate concerns on the supply side. On the other hand,

IV. Market Structure and Price Outlook: Operating Range Amidst a Divergent Landscape

Comprehensive analysis indicates that the domestic soybean meal market will exhibit a pronounced divergence pattern from March to April. In the short term, spot basis differentials will remain under pressure. On one hand, February soybean arrivals were adequate, and oil mills are gradually resuming operations, meaning supply concerns are not imminent. On the other hand, downstream purchasing sentiment requires time to recover, and the weak basis is expected to persist until early March. However, as soybean inventories decline in March, if demand shows marginal improvement at that time, the basis could find support and stabilize or rebound. The inflection point for the basis hinges on the convergence of inventory drawdowns and the actual kickoff of demand.

Additionally, March-April represents a highly sensitive window for both fundamentals and news flow. Multiple intertwined themes could amplify volatility, requiring close monitoring of: the pace of terminal procurement sentiment recovery; Brazilian shipments and domestic customs clearance speeds; auction trends; and potential speculative themes like South American weather and policy changes. Simultaneously, macro sentiment linkages will also disrupt the market. Collectively, these factors constitute the primary variables driving short-term price fluctuations. In summary, the soybean meal market from March to April will be a process of repeated collisions between expectations and reality, with volatility inevitable. Only by closely tracking key variables and dynamically validating supply-demand logic can one grasp the rhythm and avoid risks in complex market conditions.

As an integrated internet platform providing benchmark prices, on March 2, SunSirs' benchmark price for soybean meal was 3,144.00 RMB/ton, unchanged from the beginning of the month.

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