Soybean rebounded 6.25% to $12.36 per bushel this week, following brighter prospects for demand and a downward revision in crop production.
 
Global soybean consumption soared 47% over the past decade as economic growth in the BRIC region boosted demand for vegetable oil and meat. According to calculations by Bloomberg News, China, the world’s biggest importer of soybean, imported 52.3 million metric tons in the year ended 30 September. Shipments to China for the new crop year are expected to rise 8% to 56.5 million metric tons, according to the US Department of Agriculture (USDA). If the estimates provided by the USDA and by Grain.gov.cn earlier this week are correct, then 25% of China’s expected imports for the new crop year will materialise in the first three months; Grain.gov.cn said China’s soybean imports for October, November and December are estimated at 4.3 million tons, 5.2 million tons and 4.7 million tons respectively.
 
Separate data from the USDA indicate that global soybean consumption will rise by 3.8% to 262.24 million metric tons in the year ending 30 September 2012 – a record high. On the supply side, the USDA recently lowered its estimates for soybean production this year, saying farmers wouldn't be harvesting as many acres as previously thought, as farmers substitute soybean for more corn – perhaps traders are currently mulling over whether to go short on corn and long on soybean at this juncture. Meanwhile, a separate report from the agriculture ministry said that soybean output in Brazil, the world’s second-largest grower and exporter, will decline next year for the first time since 2009, due to lower yields. In a report on 9 October, Morgan Stanley analysts said they believe that the price of soybean will average $14.25 a bushel in the 12 months ending 31 August. That represents a 15% upside potential from the current price of $12.36 a bushel.