South China soybean meal prices likely to soften in Jun on rising supply

The South China soybean meal market has started to feel pressure from rising supply and slowing demand approaching end-May, with prices likely to drop below Yuan 2,800/tonne in June after experiencing a flourish spring.

In early-to-mid May, the pace of soybean arrivals and customs clearance in South China was slow. Some crushers were forced to reduce or suspend the production due to tight soybean supply, keeping operating rates at relatively low levels for the year. As a result, soybean meal inventories at crushers in South China continued to decline, with some plants even reporting zero inventory. As of the week ending May 15, soybean meal inventories in Guangxi and Guangdong stood at just 7,000 tonnes each.

At the same time, downstream feed mills showed strong willingness to take deliveries. Queues of 4–6 days at crusher gates became common, and vehicle backlogs for limited daily allocations were common. Against this backdrop of low inventories and strong immediate demand, crushers were firmly committed to supporting prices, with traders following suit.

Entering late May, the previously delayed soybean imports gradually completed customs clearance at various South China ports, replenishing crushers' raw material stocks. Consequently, crushers' operating rates rebounded significantly, with some plants which previously idled due to soybean shortages resuming double-line crushing, and soybean meal supply began to increase.

As of May 25, soybean meal inventories in Guangxi stood at 14,300 tonnes, up 7,300 tonnes week-on-week, while inventories in Guangdong reached 21,000 tonnes, up 14,000 tonnes week-on-week. South China's soybean meal inventories have bottomed out and started to rebound. The release of supply has gradually broken the previous tight balance.

Queuing for deliveries has notably eased, with some plants even offering immediate pickups. Traders have become more active in selling, with signs of weakening prices. As a result, as of May 25, spot soybean meal prices in Guangxi were Yuan 2,840-2,850/tonne, while prices in Guangdong were Yuan 2,850-2,860/tonne, down Yuan 40-60/tonne from May 14.

Looking ahead, soybean arrivals in June are expected to remain ample, and crushers' operating rates are likely to stay high. According to Mysteel's soybean shipment survey, an estimated 11 million tonnes of soybeans are scheduled to arrive in June 2026.

Concurrent with the supply recovery, no positive signals have emerged on the demand side. On the one hand, profits in hog and poultry farming remain under pressure, leading feed mills to adopt a cautious purchasing approach, which mostly restock for immediate needs, with no intention of building large spot inventories.

On the other hand, downstream feed mills generally hold forward basis contracts expiring in June-July at relatively low prices. This means that even if spot prices fall further, downstream buyers still have cheaper contracted volumes to draw upon, further weakening their willingness to procure spot supplies.

In this case, spot soybean mill prices have lost support from both the supply and demand sides. Therefore, South China soybean meal spot prices are expected to continue their downward trend in the coming period, with a high probability of breaking below the key Yuan 2,800 /tonne level.