Soybean Prices on the Rise

Article by: Hari Yellina

As the calendar approaches the southern hemisphere harvest, Australian soybean producers will benefit from near-record worldwide soybean prices. Soybeans, like all agricultural commodities, have enjoyed significant rises since the commencement of the Ukraine conflict. While soybeans are not a common crop in Russia or Ukraine, the two countries are major sunflower growers, with a significant impact on global vegetable oil prices. Sunflower oil accounts for about 15% of all global vegetable oil trade, thus markets are seeking for alternatives, such as soybean oil, now that supplies from the Black Sea have dried up. The Chicago Board of Trade futures contracts are currently characterised by high volatility, although prices are rebounding to near record levels after sustained losses.

The price was US1657 cents per bushel on Tuesday, translating to roughly $A845 per tonne. For those interested in Australia’s boutique soybean business, which is mostly centred on subtropical regions of NSW and Queensland, this is welcome news. Around 44,000 tonnes of the crop were produced last year, with the majority of it going to domestic crushers. In a recent post, Commonwealth Bank economist Tobin Gorey stated that the Black Sea was not the only factor influencing the soybean market. Although the South American harvest is expected to be below average, Mr Gorey said that due to recent rain, the market was no longer in danger of further lowering supply forecasts and putting upward pressure on prices.

Because both nations involved in the conflict are key sources of sunflower seed and oil, geopolitical concerns in the Black Sea region have a considerable impact on sunflower seed and oil supply from the region. India is a growing importer of crude palm oil, as it imports more than two-thirds of its edible oil, with palm oil accounting for more than 60% of that total. Palm oil prices rose substantially in response to the possibility of a supply disruption for sunflower oil. All edible oils watch each other’s prices since they compete in the market for price realisation, and any prospective supply disruption for one variety boosts the prices of others.