Soybeans no longer the key support for agricultural commodities — ASAP Agri

For over a year, soybeans played a central role in supporting the agricultural commodities market. Indeed, during this period, the soybean-to-corn-price ratio (SB/C) on the CBOT consistently remained above the pivotal value of 2.2, Olivier Bouillet, the Head of Analytics & Insights at ASAP Agri, told Latifundist.com.

However, since the beginning of the marketing year in Oct, the dynamics have shifted. Corn prices remained relatively stable at around 4.25 USD/bu, while soybean prices have dropped from 10.75 USD/bu to 9.85 USD/bu. As a result, the SB/C price ratio has steadily weakened from 2.5 to 2.2 over the past two months.

"This shift is rooted in market fundamentals. Soybean ending stocks are expected to increase sharply in the three key exporters — the U.S., Brazil, and Argentina. In contrast, corn ending stocks for these countries are forecast to remain stable. Anticipated record or near-record soybean production levels in these three countries are putting downward pressure on global soybean prices," the analyst says.

At present, the price balance between soybean and corn sits at equilibrium, with a ratio of 2.2. However, market fundamentals suggest further pressure on the soybean complex, compounded by the recent decline in palm oil prices and the downward trend in the meal market. As a result, the SB/C ratio could drop further, potentially reaching 2.0.

Assuming corn prices remain stable at 4.3 USD/bu, a drop in the ratio to 2.0 would imply soybean prices falling to around 9 USD/bu, down from the current 9.8 USD/bu. Should this scenario materialize, Ukrainian soybean prices on a CPT/FOB basis could face an additional 30 USD/MT reduction.