Soybean meal prices hit a new low, is a rebound imminent?

I mentioned the fundamental analysis factors of soybean meal in (Soybean Meal ETF, the only agricultural futures ETF in China). There is only one commodity ETF that domestic stock accounts can invest in for soybean meal: Soybean Meal ETF (159985.SZ).

The expansion of new IPOs in the stock market has led to a historic single-day turnover of 495.9 billion yuan in the A-share market, while the bond market's "bank self-inspection" has intensified the correction. Domestic commodity ETFs are scarce and have low correlation, making them useful for optimizing investment portfolios and reducing volatility.
 

1. Where is the soybean meal market currently?

1. From April to July, domestic soybean meal inventory accumulation was significant, with a surge in soybean arrivals;

Data source: MyAgric, Orient Futures, crappy ETF

2. The rapid rise in soybean and soybean meal inventories has significantly suppressed recent market prices;

Data source: Wind, MyAgric, Orient Futures, crappy ETF

3. Spot prices have even temporarily fallen below the cost line, and may not experience another significant drop in the short term.

Data source: MyAgric, Orient Futures, crappy ETF

Soybean meal cost = (soybean import cost + processing cost - soybean oil spot price × 0.18) / 0.78;

Crushing profit = national average soybean oil price × 0.18 + national average soybean meal price × 0.78 - soybean arrival cost 30 days ago - processing cost;

However, as inventory pressure eases and seasonal demand increases, soybean meal prices are expected to stage a rebound.

2. What factors will affect soybean meal prices in the future?

1. Global soybean supply and demand cycle: Global soybean production is expected to maintain steady growth, benefiting from expanded planting areas and increased yield per unit.

Data source: August USDA supply and demand report, crappy ETF

Meanwhile, the rapid development of global livestock and aquaculture industries will drive sustained growth in soybean and soybean meal demand, maintaining a tight supply-demand balance in the market.

2. Weather factors: As a critical period for soybean growth, weather changes from June to September significantly impact yield and prices. Particularly in August, the key period for U.S. soybean yield formation, weather factors will be a focal point for the market. Last week, the CPC's latest report further reduced the probability of La Niña, with a 66% chance of occurrence from September to November and a 74% chance of continuation until November to January next year. This adjustment not only indicates a neutral ENSO climate during the U.S. soybean growing season but also suggests a reduced probability of La Niña affecting South America in the 24/25 season.

3. Demand for soybean meal from domestic mainstream oil mills: With the continuous arrival of imported soybeans, domestic oil mills' soybean meal inventories have reached a multi-year high.

Data source: MyAgric, Orient Futures, crappy ETF

3. Other influencing factors and investment strategies for soybean meal?

The export and sales cycle of South American soybeans may extend into the second half of the year, and their supply situation will directly impact the global soybean market's supply-demand balance; The improvement in U.S. soybean good-to-excellent ratings has exerted downward pressure on prices; Changes in soybean arrivals directly affect domestic oil mills' raw material supply, thereby influencing soybean meal inventories and prices. As South American soybean exports continue and global soybean supply gradually eases, soybean meal prices may face downward pressure, while domestic demand recovery will provide some support.

At current levels, the basis has bottomed out, with limited room for further decline.In terms of operations, with U.S. soybean prices near 1000 cents and domestic soybean meal prices below 3000 yuan/ton, short-term support may emerge.Soybean Meal ETF (159985.SZ), long positions can consider adopting measures such as phased "pyramid" accumulation, setting stop-loss and take-profit levels, etc., to reduce investment risks.

$ChinaAMC Feed Soybean Meal Future ETF(159985.SZ) $Teucrium Soybean(SOYB.US)