Investing.com - BofA has reaffirmed its bearish stance on the soymeal market, maintaining its 2026 price target at $285 per ton compared to the current forward price of $308 per ton, as another market surplus appears likely.

Soymeal prices have plummeted approximately 40% over the past two years, reaching 10-year lows amid prospects of increasing output in an already oversupplied market. U.S. soybean crush volumes have shown significant growth for two consecutive seasons, increasing 3% year-over-year in 2023/24 and projected to rise 6% year-over-year in 2024/25.

The Environmental Protection Agency’s proposal to set record Renewable Volume Obligations for 2026-2027 is expected to drive crush volumes even higher, with projections indicating approximately 5% year-over-year growth. However, BofA analysts express concern about finding sufficient demand for U.S. soymeal to prevent inventory buildup in the 2025/26 season.

While domestic feed use is anticipated to show strong growth in 2025/26 (+4.5% year-over-year), driven by increasing chicken numbers (+2% year-over-year) and record livestock and poultry weights, the export outlook remains challenging. The bank cites looming availability from competing South American origins and expectations for better oilseed crops and weaker feed demand in the European Union, the largest destination market.

The U.S. soymeal market relies on just two demand outlets—domestic feed use and exports—with animal consumption serving as the primary demand driver, limiting potential avenues for absorbing the projected surplus.

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