Soybean prices reach a two year record, as Chinese demand continues to drive the market
The Shipfix Soybean Index provides insights into demand sentiment since 2015. The index shows a strong correlation between soybean prices and volumes shipped by sea.
Soybean prices reached a floor back in March 2020, however since then have increased by more than 40%, reaching 1,165 USd/bushel as of today, breaking the previous two year record of February 2018 (Source: Bloomberg).
China is driving demand for US Soybean despite the ongoing trade tensions. South American supply is on watch with deteriorated weather conditions.
As of the week ending October 29, 2020, US soybean shipments to China totalled 12.1 million tons and 4.5 million to the rest of the world. US soybean export commitments (outstanding sales plus accumulated exports) to China soared to 26.8 million tons compared to 7.1 million the previous year" (USDA, Nov 2020).
South America producers on the other hand have provided more than 55% of Chinese demand in 2020 (year-to-date), predominantly from Brazil (40%), which remains China’s largest supplier. The graph below provides an illustration, based on order volumes observed by Shipfix.
However, what shape will the South America crop take in the coming months? Weather phenomena such as “La Nina” may impact on harvests, but factors such as the Covid-19 pandemic and the prospect of more government stimulus also add uncertainty to the outlook.
Shipfix Indices and forward curves provide insights into the upcoming trade flows from the US, Brazil, and Argentina (by volume) and by destination (discharge) country or region. These are based on global market orders on a spot-onward basis, aggregated and anonymised.
Our signals are derived from the earliest stages of the supply chain; days or weeks before cargoes are physically loaded and far in advance of import/export publications, bills of lading, AIS vessel data, or any other trade data source for that matter!
The animation below illustrates how you can visualise and analyse on Shipfix the forward curve for soybean volumes, weeks in advance.