Europe weighs firmer soybean meal prices amid Brazil's weakening processing margins

Higher European soybean meal prices and growing supply concerns, along with deteriorating crush margins in Brazil are increasingly drawing the concern of traders and brokers in Europe about the supply situation for the rest of the year.

On July 29, Platts assessed both soybean meal FOB Netherlands and EXW Tarragona at Eur365/mt, up 4.7% and 5.4% month on month, respectively.

The increase is on the heels of drop in the crush margin. On July 27, Platts assessed the Soybean Crush Spread FOB Paranaguá, a synthetic calculation of crush margins based on FOB values, at $13.50/mt, the lowest level since mid-October 2025 and down around 80% from the start of the year.

While several market participants said it was too early to forecast how conditions might evolve, the potential for reduced processing in the South American powerhouse is beginning to weigh on sentiment, given Brazil's role as a key supplier of soybean meal to Europe.

Soybean meal prices in Spain are rising, supported by firm futures prices and limited stocks at origin as of July 24, according to a local trader.

Another market participant said he had "heard recently that soybean meal production would decrease in Brazil," and noted that "if so, that would increase prices in Europe as well." He added that soybean meal premiums "remain unchanged, with no increase so far," but suggested they may change soon.

An Italian trader said that while recent futures gains and reports of compressed crush margins in Brazil have raised concerns over soybean meal availability later in the year, "it may be too early to assume this will translate into tighter supply or higher prices in Italy."

The trader added that in Brazil, old-crop soybean costs are pressuring margins, but "energy and distillate markets, together with domestic biodiesel demand, could continue to support crush activity."

European Commission data show that Brazil accounted for 52% of EU soybean meal imports in the 2025-26 marketing year, July-June, compared with an average of 48% over the past 10 years, underscoring the region's exposure to shifts in Brazilian crush activity.

Brazilian margins deteriorate

Brazil is facing uncertainty over the pace of soybean processing in the second half of the year and the subsequent supply of byproducts, as crush margins come under increasing pressure.

Tighter crush margins in Brazil largely reflect the sharp rise in soybean prices amid concerns over weather conditions for crops in the US Midwest, as well as renewed expectations of Chinese purchases of US soybeans.

Platts recently assessed SOYBEX FOB Santos above $500/mt on July 22 for the first time since December 2023.

"Forward margins remain negative due to strong soybean prices and competition from oilseed exports," S&P Global Energy CERA analysts said in the Global Soybean Complex Short-Term Outlook report published July 24.

"Crushers might move up their scheduled maintenance period this year and resume the strong crush pace in the fourth quarter if margins improve," the CERA analysts said, adding that such a scenario could present some modest downside risk to their current crush forecast of 63.50 million mt for the 2025-26 cycle (January-December).

Market participants also said crushers are struggling to secure soybeans from farmers due to relatively slow selling. Some plants have operational stocks covering only 40 days, with the situation most critical in Mato Grosso, Brazil's largest soybean-producing state.

Platts assessed soybean meal FOB Paranaguá at $362.99/mt, up $3.31/mt on the day and 7.3% higher month on month.