Due to the impact of Sino-U.S. tariff issues in the first half of 2025, domestic procurement progress for soybeans in the first quarter of 2026 experienced a temporary slowdown. To address potential supply gaps, the National Grain Trade Center has successively organized three rounds of imported soybean auctions since December 2025. As of today, however, the center has yet to release the announcement regarding the auction of imported soybeans, indicating that this week's auction may be suspended.
The three rounds of auction in December each had a volume of over 500,000 tonnes, with storage locations primarily in the northern part of China. A key trend observed is that both the average transaction price and the transaction closing rate have shown a sequential decline.
Recently, the average transaction prices have remained in the range of Yuan 3,750–3,950/tonne, significantly higher than the level of around Yuan 3,500/tonne earlier in the year. The cooling of transactions and narrowing of premiums indicate that the market's most urgent demand to "fill the gap" has been temporarily fulfilled, and some buyers have completed their procurement targets.
From a domestic supply-demand perspective, current domestic soybean and soybean meal inventories have remained high. As of the week ending December 19, imported soybean inventories at domestic crush plants stood at 7.2236 million tonnes, an increase of 1.4379 million tonnes or 24.85% compared to the same period last year. Soybean meal inventories were 1.1371 million tonnes, up 554,300 tonnes or 95.11% year-on-year.
Based on the current weekly crushing volume, approximately 5 million tonnes of soybeans can be carried over for use in January, indicating no shortage of raw material supply. Insufficient downstream pickup enthusiasm has made it difficult to effectively reduce soybean meal inventories, forcing some crush plants to shut down due to stockpiling pressure.
Downstream players mostly hold sufficient stocks. Mysteel surveys of downstream enterprise inventories show that total inventory positions generally exceed one month, with many enterprises gradually increasing the inventory to two months due to concerns about supply issues starting in January. Therefore, when crush plants recently began selling first-quarter basis contracts, market purchasing willingness for soybean was strong. After procuring the corresponding volume of soybeans for delivery contracts, crush plants' interest in further participating in auctions has diminished due to cost considerations.
To sum up, the reduction in transaction prices and closing rates of auctions can be attributed to the following:
(1) Foreign-funded and private crush plants, which actively participated in earlier auctions, have largely completed their goals of filling the first-quarter raw material supply. At current high price levels, the cost-effectiveness of continuing large-scale purchases has decreased, naturally dampening interest.
(2) The latest shipping fixtures data shows that soybean port arrivals in the first quarter of next year are better than expected. Buying pace for December to February shipments has reached 99.4%, 89.4%, and 79.3%, respectively. This means that supply-side tightness expectations have been fundamentally alleviated.
(3) As mentioned, both soybean and soybean meal inventories at factories are currently at historically high levels for the same period, providing a strong "buffer" for the market.
(4) To address the possible supply issue, downstream purchasing willingness for the first quarter of next year has increased, with contract inventories generally advancing to over two months.
In this case, some factories may experience soybean shortages as there may not be any auctions before the New Year's Day holiday, and the recently auctioned soybean is stored in the northern China. It is necessary to continue monitoring the customs clearance time for soybeans at crush plants and the transaction results if auctions are conducted in the future. Until there is a substantive reduction in inventories or an unexpected increase in demand, the soybean meal market as a whole is expected to remain under pressure.
Written by Stacy Chen, chenyijuan@mysteel.com
