The latest monthly supply and demand report from the United States Department of Agriculture (USDA) has revealed changes in the supply and demand patterns of major global agricultural products. Among them, China's corn import target has been further reduced to 8 million tons, while the global soybean crushing volume has increased month-on-month, highlighting the differentiated trends of different crops under trade policies and production adjustments. The Asia Food Exhibition also noted that the supply and demand of crops such as wheat and sugar remain loose, while the livestock chain is facing dual impacts of avian influenza disturbances and capacity recovery.

I. Corn and Soybeans: Market Divergence Driven by Policy and Production

Corn: The USDA has further reduced its estimate of China's corn imports for the 2024/25 season by 2 million tons to 8 million tons, with the end-of-period inventory-to-sales ratio falling by 0.64% to 64.27%. Domestic corn prices are already at cyclical lows, and since December 2024, the China National Grain Reserves Corporation has continued to expand its purchases, further strengthening price support. In the international market, Chicago corn futures have recently shown a weak trend, with traders remaining cautious about tariff policies and inventory reports. However, the domestic supply and demand are already at a loose peak, and prices are expected to recover gently.

Soybeans: The soybean market is showing phased contradictions. The global soybean crushing volume increased by 2.95 million tons month-on-month to 353 million tons. However, under the pressure of a bountiful harvest in South America, prices may remain at the bottom in the first half of the year. The USDA expects the planting area of new-season US soybeans to decrease by 4% year-on-year, and the autumn output may face pressure. Currently, Chicago soybean futures prices are fluctuating in the range of $9.90 to $10.30, with the market remaining cautious about tariff policies and the increase in Brazilian supply. In the long term, the expected reduction in US production may drive the long-term price center upward.

Policy disturbances have become a key variable. After China imposed additional tariffs on the US, imports shifted to alternative sources such as Brazil, ensuring short-term soybean supply security. However, repeated trade frictions may exacerbate market volatility, and it is necessary to pay attention to the impact of the arrival pressure of Brazilian soybeans after April on the domestic soybean meal basis.

II. Wheat, Sugar, and Livestock Chain: Loose Patterns Continue, with Local Disturbances Emerging

Wheat: The supply and demand of wheat have become even looser. The USDA has increased the global wheat production for the 2024/25 season to 797 million tons, with the end-of-period inventory-to-sales ratio rising to 32.24%. Russia has cut its export quota by 63% to 10.6 million tons, but China's wheat inventory-to-sales ratio remains as high as 85.5%, and domestic prices may slowly recover with the corn price center. Chicago wheat futures are fluctuating in the range of $5.45 to $5.85, with the market remaining sensitive to trade policies in the Black Sea region and weather risks on the US plains.

Sugar: The sugar market continues to expect increased production. China's sugar production for the 2024/25 season is expected to increase by 1.04 million tons, with ample supplies from Brazil and Thailand, and continuous global inventory pressure. The domestic sugar season is progressing faster than usual, with industrial inventories accumulating, and sugar prices are limited in their upward movement. Although India's production cut has brought short-term disturbances, the raw sugar price is still facing import pressure after the profit from out-of-quota imports turns positive.

In the livestock chain, avian influenza in the US has led to a 0.8% downward adjustment in egg production estimates, with short-term egg prices strengthening, but supply is expected to gradually recover in the second half of the year. China's egg inventory has increased by 7.05% year-on-year, with prices under pressure for the whole year. In the hog market, the domestic inventory of breeding sows remains high, and breeding profits are expected to contract year-on-year; US pork consumption is slightly higher than supply, and prices may recover gently.

Overall, the global agricultural market is showing a differentiated pattern amid the interplay of policies, production, and demand. Corn and soybeans are gradually accumulating long-term price recovery momentum, while crops such as wheat and sugar still need to digest excess supply. The livestock chain needs to pay attention to the rhythm of disease disturbances and capacity adjustments.

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Source: the financial industry

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