SunSirs: Soybean Meal & Rapeseed Meal: Spot Market Trends and Outlook

I. Soybean Meal Spot Market Trends

In May, the domestic soybean meal market generally followed a pattern of initial gains followed by declines, characterized by volatile and slightly bearish trading. Driven by an easing in China-US trade relations, customs clearance efficiency for soybeans improved. Large volumes of South American soybeans arrived at ports and entered storage facilities in quick succession, ensuring ample raw material supplies for oil mills and leading to a steady increase in crushing volumes. Domestic soybean meal inventories began to rebound from the lows seen in early May; the inflection point for inventory accumulation has become apparent, and spot market supplies are gradually becoming more abundant. Spot market transactions were primarily driven by immediate, "buy-as-needed" requirements, as feed manufacturers generally maintained lean inventory turnover strategies and showed little inclination for large-scale restocking. The downstream livestock sector remained sluggish; hog farming continued to incur losses, the breeding sow herd maintained a trend of contraction, and demand for hog feed acted as a significant drag on the market. While immediate demand for poultry feed remained stable and growth in demand for aquatic feed was limited, overall demand proved insufficient to drive spot prices upward. On the international front, although US soybeans received some support from bullish market reports, expectations of a bumper harvest in South America capped price gains, providing only limited upward momentum for the domestic soybean meal market.

II. Rapeseed Meal Spot Market Trends

In May, the rapeseed meal market trended from initial stability to subsequent weakness, though spot prices demonstrated a degree of resilience against declines. Following adjustments to China-Canada trade policies, restrictions on rapeseed imports were eased. Port arrivals continued to recover, and the operating rates of coastal oil mills—in terms of rapeseed crushing—gradually rebounded, leading to a steady increase in market supply for rapeseed meal. Domestic rapeseed meal inventories began to accumulate from previously low levels; while regional inventory levels showed some divergence, the overall pressure from abundant supplies gradually became apparent. On the demand side, as temperatures rose, the aquaculture sector entered its traditional peak season. Aquatic feed offtake improved on a month-over-month basis, providing a certain level of floor support for rapeseed meal spot prices. However, the narrowing price spread between soybean meal and rapeseed meal dampened the substitution effect; with demand for livestock and poultry feed remaining stable, the overall demand elasticity for rapeseed meal proved insufficient. On the international front, delays in the spring sowing progress in Canada provided support for rapeseed prices, thereby indirectly limiting the downside potential for domestic rapeseed meal prices.

III. Market Outlook

Soybean Meal Outlook

Looking ahead to June, the soybean meal market is expected to remain volatile and slightly bearish, with the central price range shifting downward. On the supply side, Brazilian soybeans are expected to continue arriving in concentrated volumes between May and July; monthly arrivals will remain at high levels, oil mill operating rates will stay elevated, the pace of soybean meal inventory accumulation will persist, and pressure from spot market supply will continue to be released. On the demand side, the pattern of losses in the hog farming sector is unlikely to reverse quickly, leaving demand for hog feed—and consequently soybean meal—weak; while poultry and aquaculture feeds provide a rigid floor of basic support, they are unlikely to generate any incremental boost to demand. On the cost side, although the Brazilian exchange rate offers some minor support, the outlook for a bumper harvest in South America remains clear; furthermore, the planting of the new U.S. soybean crop is proceeding smoothly, and short-term weather-related speculation has yet to emerge, thereby limiting the upside potential for international futures markets. Overall, a market dynamic characterized by strong supply and weak demand has become firmly established for soybean meal; consequently, the scope for a price rebound is limited, and the market is expected to trend mainly within a weak-leaning trading range in the near future.

Rapeseed Meal Market Outlook

For June, rapeseed meal prices are expected to stabilize initially before trending lower, though spot prices are likely to demonstrate relative resilience against declines. On the supply side, rapeseed imports continue to recover, with arrivals steadily materializing at ports; oil mill crushing volumes are increasing further, leading to higher output of rapeseed meal and a clear market expectation of inventory accumulation. On the demand side, essential demand during the peak season for aquaculture continues to warm up, providing support for spot prices; however, the overall growth in demand is failing to keep pace with the increase in supply. On the cost side, delays in the spring planting of Canadian rapeseed are providing support to international futures prices, thereby limiting the potential for a sharp decline in rapeseed meal prices; conversely, expectations of a global bumper rapeseed harvest are capping the potential for upward price movement. In summary, spot rapeseed meal prices are expected to exhibit strong resilience against declines—bolstered by low inventory levels and essential demand during the peak season—yet the expanding supply volume will constrain any upside potential; the market is expected to generally follow a pattern of retreating from recent highs and consolidating within a trading range.

Key Focus Areas for the Market Outlook

Going forward, key variables to closely monitor include the actual pace of soybean and rapeseed arrivals at ports, changes in oil mill operating rates and inventory levels, the progress of capacity reduction in the hog farming sector, the recovery of demand within the aquaculture industry, as well as shifts in trade policies between China and the U.S./Canada, and any weather-related disruptions in major production regions.

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