China's soybean prices stay well-supported despite recent pullback

While tight soybean supply allowed continued price rally since late 2025, the prices kicked off a phased pullback starting end-May 2026 with easing market sentiment and the tug-of-war between bulls and bears. Yet, the expectations of supply tightness in the long run remain intact.

At the end of May, domestic DCE soybean futures and spot prices experienced a stage pullback, based on Mysteel's data. The most-traded No. 1 soybean futures contract A2607 fell from its highs to a low of Yuan 4,686/tonne. At the same time, spot prices in Northeast China, the southern regions, and consuming areas declined across the board, recording a monthly contraction of around Yuan 80-100/tonne in the producing regions in Northeast China, and Yuan 50-200/tonne in the southern and consuming areas.

This price adjustment is both a reasonable correction after the previous rally and a reflection of short-term supply-demand dynamics and changes in market sentiment.

Earlier, domestic soybean prices continued to rise due to dwindling grain stocks and high prices at state reserve auctions. The high prices encouraged some traders locked in profits in advance, and their concentrated selling disrupted the short-term supply-demand balance. This was especially true in the producing regions in Northeast China, where selling activities picked up in mid-to-late May, and the release of some grain stocks directly led to a pullback in spot prices, dragging futures prices lower.

Tofu and soybean consumption is still in the off-season, and the recovery in operating rates at downstream processing plants has fallen short of expectations. Downstream buyers mostly purchased only as needed, with little appetite for large-scale restocking. On the crushing side, domestic soybeans have been squeezed by low-priced imported beans, and crushing margins remained negative, weakening crushers' purchasing interest. This further reduced demand-side support, putting synchronized pressure on both futures and spot prices.

Lastly, the bulls taking profits also contributed to the recent price pullback. Earlier, trading of El Niño weather expectations and concerns over new-season planting fueled bullish sentiment, pushing futures prices higher. Some speculative funds took profits as unsold old crop grain stocks in Northeast China were released periodically and market expectations of a weather premium cooled marginally, which triggered a pullback in futures prices that then transmitted to the spot side.

However, it is unlikely that the soybean prices to show significant reductions going forward. While traders have recently been selling off their stocks, the clearance of old stocks in Northeast China is already in its final phase. Taking soybean stocks in Heilongjiang as an example, farmers are estimated to have roughly 7% of their initial inventories left, while traders have about 25%.

As prices have fallen, the collection outlets have again refrained from selling, suggesting that marketable supplies will continue to tighten going forward. Besides, the state reserve auctions' floor price of Yuan 4,500/tonne continues to provide strong support at the lower end, and the fact that several auctions have cleared at significant premiums shows that market consensus on a tight supply remains unchanged. Accordingly, there is limited room for a deeper price correction.

Moreover, the impact of El Niño weather on new-season soybean planting in the Northeast continues to unfold. China's soybean spring planting progress, soil moisture conditions, and subsequent growing-season precipitation remain core variables for the market. If weather takes an unfavorable turn, market concerns over new-season production will intensify again, providing significant price support.

Specially, while prices of ordinary low-protein beans fell relatively more significantly during this round of pullback, high-protein beans saw limited declines due to rigid demand from downstream food processing, further widening the protein price spread.

As the peak consumption season for bean products approaches, downstream demand for high-protein beans is expected to pick up, providing new support for spot prices. Using Hailun low-protein and 41% proteincontent soybeans as an example, in May, lowprotein bean prices fell Yuan 160-200/tonne (Yuan 0.08-0.10/jin), currently quoted at Yuan 4,400-4,440/tonne (Yuan 2.20-2.22/jin); while 41% proteincontent bean prices fell by Yuan 600-1,000/tonne (Yuan 0.30-0.50/jin) in May, currently quoted at Yuan 4,800-4,860/tonne (Yuan 2.40-2.43/jin).

In the short term, domestic soybean futures and spot prices will continue to be shaped by traders' selling pace, end-user demand, and market sentiment, and the prices will likely maintain a slightly weak trend. Prices of ordinary beans in the Northeast may move further toward the Yuan 4,600-4,700/tonne (Yuan 2.30-2.35/jin) range.

In the medium term, however, the three core supports, including dwindling old-crop stocks, state reserve backing, and new-season planting uncertainty, remain intact, limiting significant downside room. As trader selling slows, the peak consumption season approaches, and weather risks linger, bullish sentiment is expected to return, potentially steering futures and spot prices back toward a volatile but firmer trend. Overall, the likelihood of a recovery following this sentiment-driven pullback remains relatively high.