By Mei Mei Chu
BEIJING (Reuters) - Soybean oil prices on China's Dalian Commodities Exchange fell for a third consecutive session on Tuesday, with soymeal prices also declining as demand slowed amid growing South American supply.
Soybean oil contract for May delivery fell 3.8% to a seven-month closing low of 7,204 yuan ($1,003.79) a metric ton. That was it biggest daily decline in more than a year.
The most-active soymeal contract fell for a fourth straight session to 2,944 yuan ($410.21) per ton, its lowest close since mid-July 2023.
Demand from China, the world's top soy importer, is weakening as stockpiling ahead of Spring Festival ends and animal feed demand declines, traders and analysts said.
China buys more than 60% of globally-traded soybeans, which is used to create soymeal for animal feed and oil for cooking.
"Domestic stockpiling of oils and fats before the Spring Festival is coming to an end. The market outlook for oils and fats demand is weak, and the progress of destocking may slow down," said Liu Jinlu, researcher of agricultural products from Guoyuan Futures.
Soymeal demand has also been impacted by a smaller pig herd, as farmers rushed to slaughter amid high costs and plummeting livestock prices.
"In the medium and long term, China's demand for imported soybeans may be sluggish," Liu said.
Market sentiment is also bearish, with continuous upward revisions to forecasts of Argentina's soybean production, analysts at MySteel said.
The Buenos Aires Grains Exchange has raised Argentina's 2023/24 soybean harvest forecast to 52.5 million tons as crops benefited from more rainfall.
Meanwhile, top producer Brazil's 2023/24 harvest reached 11% of the planted area as of last Thursday, agribusiness consultancy AgRural said, compared to 5% at the same time last year.
Dalian soybean oil is expected to drop into a range of 6,617-6,860 yuan, driven by a wave c, Reuters technical analyst Wang Tao said.
Dalian soymeal is likely to stabilise in a support zone of 2,776-2,936 yuan and start a decent bounce towards 3,729 yuan thereafter, he said.
($1 = 7.1768 Chinese yuan renminbi)