Home-Made Soybean Prices Ascended Greatly, but BOABC’s Analysts think the Farmers and the Traders Shouldn’t have a Strong Stockpiling Psychology

It is busy season of selling and buying soybean in the northeast now, but the situation is different this year. The reasons are: first, soybean prices kept increasing greatly. At the end of November, new-season soybean prices in the production areas of northeast almost were upward of RMB 5,000/MT and the market players predicted that the prices would increase to RMB 6,000/MT. However, the prices in the same period of last year were around RMB 4,500/MT. Second, the prices are too high, but the farmers still have a strong stockpiling psychology, and the trading volume is limited. The traders and the processors both said that it was difficult to purchase, and some small and medium-sized traders and processing companies almost stopped acquiring or production.   
 
This year, soybean output increased by 6% and the total output was predicted to exceed 19 million MT, which almost can meet the final demand for processing. The main reasons for a great increase: the farmers have a strong stockpiling psychology and predicted that the prices still would go up; besides, the traders have more stocks and are relatively scattered, whose source of goods is upward of 60%, resulting in a less supply on the market and a continuous increase in prices.
Since December, the decline in railway freight has been cancelled and the transportation costs have increased; besides, along with the cooling temperature, there will be more rain and snow in the northeast, which would be unfavorable for soybean transportation. At that time, soybean market would face more problems: there are more goods in the production areas, but there are more difficulties on selling to other provinces, so the operating rates in the consumption areas would be low due to a shortage.; even if there are some goods, but the prices are too high and the processing margins are low, soybean market will have an embarrassing situation of high prices but no sales. Therefore, BOABC’s analysts think the farmers and the traders shouldn’t have a strong stockpiling psychology, and they can sell out with certain profits.