Soybean-Meal Oversupply Crisis Incoming?

The Commodity Report #190

---

Soybean-Meal Oversupply Crisis Incoming?

When you crush soybeans, you get one part of soy oil and another part of soy meal. Per soybean crushed, you get something like an 80/20 meal to oil share.

While the soy oil part is currently in high demand due to a higher bioethanol requirement (Brazil increased the share from 14% to15% as of 2025), there isn’t an additional demand driver for soy meal. Therefore, the market will currently face a slight oversupply of soybean meal while soybean oil stays in high demand.

Created with TradingView

The increased soybean crushing aimed at soybean oil is expected to lead to a record production of soybean meal by Brazil, usually the second-largest exporter of this commodity, behind only Argentina.

Futures prices actually do mirror these fundamentals. Meanwhile, the entire soy-sector stays in a structural bear market. That is a primary reason for us to currently only look out for selling opportunities in these markets once some emerge.

While soy oil is not only used for ethanol blending but also as a cooking oil, soy meal is primarily used as feed for poultry and pigs.

---

In Other News…

While US stocks in general and the banking as well as the utility sector stay in high demand by investors, there remains a slight underweight in broad basket commodities and a larger underweight in energy, this month’s BofA fund manager survey showed.

While the Long Mag7 trade remains the most crowded trade in the investment community, according to the bank, the Long US-Dollar trade is slowly but steady catching up to the hype. With all of president Trump’s agendas in mind, once should think about the consensus at this point. A slightly weaker USD should actually be a more favorable scenario for the president’s plans going forward. (Just a thought - not a trading idea, as the USD trend remains too strong for us to think about fading it yet)

Contributing to that thesis is also the following statistic. Especially the Euro seems to be strongly hated at the moment by investors due to the toxic cocktail of weak economic momentum, war near its borders as well as a fragile political environment with a lot of let’s say more right wing momentum entering the debate. (watch out for election in Germany in February)

---

This week, look out for the following:

• Durable Goods Orders on Monday

• FOMC Rate Decision on Wednesday (consensus expectation is that rates will be hold at 4,50%)

• PCE Price Index on Friday

---

Research Service

If you’re an institutional investor, check out our research products for commodity-related futures or equities here.

---

Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via X or Mail.

Disclaimer: All information, views, and opinions provided herein are for informational purposes only and should not be construed or relied upon as investment advice, an offer to sell, or a solicitation for any form of investment. The information contained in this website is the most recent information available to us (except otherwise noted); however, all of the information herein is subject to change without notice. Certain information included in this website is based on data obtained from sources considered to be reliable; however, no representation is made with respect to the accuracy or completeness of such data. All opinions, estimates, and forward-looking statements, including any market forecasts or projections, involved.