Prospects for soyabean look bearish in 2025 on record high Brazilian production, weak Chinese demand stocks, uncertainty over US biofuel policy and potential for escalation of trade tension between the US and China, say analysts.
The development does not augur well for Indian soyabean growers, who are currently getting prices lower than the minimum support price of ₹4,892 a quintal.
A bearish global market could see farmers shifting to other crops such as pulses or maize, akin to mustard farmers switching over to wheat this rabi season looking forward to stable prices, say trade sources.
Under pressure in 2024
“Most likely, the US will make China the primary target for tariffs, with used cooking oil imports potentially among the first to be affected. When China retaliates, the humble soyabean, as the single largest agricultural purchase that China makes from the US, might once again find itself in the crosshairs,” said Rabobank in its Agri Commodity Markets Research Outlook 2025.
Soyabeans have come under significant pressure through 2024, with the global balance looking increasingly comfortable, said ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING. “Ending stocks for the 2024-25 season are estimated at a record high of almost 132 million tonnes (mt), up more than 17 per cent year-on-year,” it said.
There are downside risks to soyabean prices stemming from an expected downturn in demand from China, said research agency BMI, a unit of Fitch Solutions.
Current price trend
In the global market, soyabean prices are currently near a three-month low of $9.6 a bushel with estimates of record-high stocks putting further pressure.
In India, the weighted average price of soyabean is currently ₹4,050 a quintal. Refined soyabean oil prices are currently quoted at ₹1,23,000 a tonne in the wholesale market, lower than ₹1,30,500 for RBD palmolein. The landed price of degummed soyabean oil is currently $1,090 a tonne.
ING Think said US soyabean supply has been bearish for the market. “Soyabean area in 2024-25 increased by 4.2 per cent year-on-year (yoy), while yields also increased by more than 2 per cent yoy. As a result, US soyabean production is estimated to increase by 7 per cent yoy to 4.46 billion bushels (121mt), which as a result also saw ending stocks surging higher,” it said.
Biodiesel mandates
Rabobank said, “With soya prices down by 25 per cent yoy, US farmers might not believe their (bad) luck.” The US government could provide some compensatory measures to its farmers, but until such measures are announced, there is plenty to worry about, it said.
BMI said several changes to biofuel mandates are set to come into effect in 2025. “Firstly, in Brazil, the country is expected to adopt B15 in 2025, diesel blended with 15 per cent biodiesel, up from 14 per cent in 2024, which will require additional supplies of raw soyabean, which we expect to counterbalance some of the downside risk to prices stemming from an expected downturn in demand from China, though the increased feedstocks will not fully offset this,” it said.
The research agency said it expects Indonesia to adopt a 40 per cent biodiesel blending mandate from January 1, which will provide support for palm oil. The increase from B35 to B40 could require an additional 1.5-1.7 mt of palm oil, equivalent to 5.7-6.5 per cent of Indonesia’s total palm oil exports in 2023.
Shift in global trade
“The Indonesia Biofuel Producer Association estimates that this 5 per cent increase will raise annual palm oil use for biodiesel from 11 mt to 13.9 mt. We believe this is likely to remain a theme beyond 2025, with both Brazil and Indonesia expected to continue pursuing higher blending mandates…,” said BMI.
Rabobank said it expects significant shifts in international trade. “For example, a trade deal between the US and the EU could result in all or most of EU soya and soyameal import demand shifting to the US and away from South America,” it said.
ING Think said while the outlook for the soyabean market is somewhat subdued, there is uncertainty going into 2025. “This uncertainty arises from soyabeans potentially getting caught up in trade tensions, particularly for US flows to China,” it said.
