Soybeans: what the market projects in an uncertain year, with doubts about the recovery of China

Grain prices fell Tuesday in Chicago and opened in the red on Wednesday on Euronext, where wheat exceeded $317 per tonne during the session, its level at the beginning of March, erasing the upward fluctuations of late December, while corn was showing at part time around 307 dollars per ton.

The market faces many questions with hardly any answers: Will the lifting of sanitary restrictions in China favor a rapid recovery of the Asian giant? What marks will the storm in the United States and the drought in Argentina leave on crops? How will the Ukrainian conflict evolve?

“The market is prudent, especially due to China,” where manufacturing activity declined in December for the fifth consecutive month, said Michaël Zuzolo of consultancy Global Commodity Analytics.

“In the long term, we are optimistic about the fact that demand will rise (…), the Chinese consumer has been saving for three years. But in the short term it is something else. Demand is weakening”explains Arlan Suderman, from the Stonex platform.

In addition, concerns about a slowdown in the economy are growing after the director general of the International Monetary Fund, Kristalina Georvieva, predicted that a third of the world economy will enter a recession by 2023.

What will happen to soybeans in 2023

The other big concern is soy. “The market is torn between what is being announced as a large crop in Brazil and the drought in Argentina. It is looking to determine to what extent one will compensate for the other,” Suderman says.

But, he stresses, that it is too soon to estimate the impact of the drought, “ripening is slow in Argentina”.

The oilseed reached its highest level in almost five months at the end of last week in the US market.

Since the prices are high, “Brazilian farmers will be tempted to immediately sell” their produce, which “will make a prolonged price rebound more difficult,” Suderman asserts.