Soybeans: Analysis of the Saudi Market and Companies' Role

Soybeans are defined as a globally cultivated legume and are considered one of the most important agricultural crops due to their high nutritional and industrial value. Soybean production is concentrated in the United States, Brazil, Argentina, and China, with annual production exceeding 380 million tons for 2024. The main uses of soybeans include animal feed production (poultry, cattle, fish), cooking oil production, plant proteins, and various food industries such as tofu, tempeh, and soy milk. Additionally, soybeans are used in pharmaceuticals, cosmetics, and some industrial products such as dyes and organic fertilizers. Globally, soybeans are considered a strategic commodity listed in commodity indexes and are closely monitored by investors and analysts due to their impact on feed and food product prices. The increasing demand for meat and dairy in Asia, along with the expansion of vegetable oil usage, enhances the importance of soybeans in the global economy.

Global soybean production witnessed a significant increase in 2024, reaching approximately 380 million tons compared to 370 million tons in 2023. This growth is primarily attributed to the expansion of cultivated areas in Brazil and Argentina, along with improvements in agricultural technologies. Global soybean prices recorded fluctuations during the last quarter of 2024 and the beginning of 2025, influenced by weather volatility and increased demand from China and India. In September 2025, China halted imports of American soybeans for the first time in seven years, shifting demand to Brazil and Argentina, which affected market share distribution and futures prices. The average price of American soybean futures (November 2024) reached about 1050 cents per pound, fluctuating between 950 and 1100 cents during the first half of 2025. These movements reflect the market's sensitivity to changes in supply and demand, as well as trade tensions between major producers and consumers.

The Saudi market relies entirely on importing soybeans from abroad, as there is no local cultivation of this crop due to unfavorable climatic conditions. The Kingdom imports millions of tons annually for use in animal feed production and oil production. Rising global soybean prices directly impact feed and food product costs, sometimes leading to inflationary pressures on the final consumer. The animal feed sector is one of the most affected by soybean price fluctuations, as major companies like ARASCO and WATANIA rely on its import to meet their industrial needs. Saudi regulatory authorities also monitor global soybean market developments to secure supplies and achieve price stability locally.

Global soybean prices directly affect the profitability and performance of several companies listed in the Saudi financial market, especially those operating in the feed and food product sectors. Prominent companies include the Arab Group for Agriculture and Food Services (ARASCO), National Poultry Company (WATANIA), Mega Group (MEGATR), Atyab (AFC), and Al-Sunbula Group. ARASCO is one of the largest soybean importers for feed production, while WATANIA primarily relies on soybeans for poultry feed. Mega Group focuses on producing animal feed using imported soybeans, while Atyab and Al-Sunbula Group use soybeans in their food and feed production lines. The results of these companies are affected by global price fluctuations, and changes in soybean costs reflect on profit margins, pricing policies, and expansion plans.

The financial indicators for companies linked to soybeans in the Saudi market show significant revenue growth in 2024, driven by increased demand for feed and improved profit margins following the stabilization of production input prices. For example, ARASCO recorded a net profit of 250 million SAR in the third quarter of 2024 compared to 200 million SAR in the same period of the previous year, with an annual growth of 25%. Revenues reached 1,500 million SAR compared to 1,200 million SAR, with an improvement in the operating profit margin ratio. Meanwhile, National Poultry Company achieved revenues of 900 million SAR and net profits of 120 million SAR in the same period, with a 15% annual increase in revenues. These results reflect the companies' ability to manage risks associated with soybean price fluctuations and their flexibility in pricing strategies to mitigate negative impacts on profits.

Soybeans fall under the agriculture and food sector in the Saudi financial market, a sector characterized by intertwined supply chains and heavy reliance on imports. Animal feed production is the main activity affected by soybeans, as this crop constitutes the primary protein source in feed. Companies face challenges related to currency fluctuations, rising shipping costs, and difficulties in securing supplies amid geopolitical crises. The Kingdom is also seeking to reduce reliance on imports by promoting modern agricultural technologies, such as hydroponics and protected agriculture, although soybeans remain outside the scope of actual local cultivation. The sector also faces competition from alternative crops such as corn and barley, yet soybeans remain the top choice due to their high nutritional value.

Competition in the Saudi soybean sector is represented in food supply chains that include local feed companies (such as ARASCO, WATANIA), specialized agricultural companies (like Al-Jouf Agricultural, Al-Nahdi Agricultural), and international suppliers from major soybean producers in Brazil, Argentina, and the United States. These companies compete to secure soybean import contracts at favorable prices and develop compound feed products to increase efficiency and reduce costs. Alternative crops (such as forage corn and barley) also compete for some of the attention of companies and investors in the agricultural sector. The Saudi government supports efforts to diversify feed sources and production technologies to address global market fluctuations and achieve sustainable food security.

Fluctuations in soybean prices in global markets directly affect production costs and profit margins for feed and food product companies listed in the Saudi financial market. Rising prices lead to increased feed costs, which reflect on the prices of meat, dairy, and poultry, while falling prices may improve the profitability of local companies. Saudi companies closely monitor global soybean market developments and sometimes resort to hedging strategies through futures contracts or diversifying import sources. Additionally, changes in global exchange rates and shipping prices also affect the cost of importing soybeans, enhancing the importance of effective financial management and risk management plans.

Global demand for soybeans is expected to continue growing, especially with Asia (China and India) emerging as a major consumer. In Saudi Arabia, reliance on soybean imports is expected to persist in the short to medium term, with increased investment in modern agricultural technologies and food diversification initiatives. Opportunities for developing new feed factories in Gulf countries and strengthening partnerships with international suppliers to ensure stable supplies are emerging. The Saudi government also encourages the search for local alternatives and the introduction of vertical and hydroponic farming technologies, although soybeans remain a fully imported commodity for now. Rapid responses to market fluctuations, expanding the supplier network, and adopting technological solutions in production represent strategic trends to enhance agricultural food security.

The years 2024 and 2025 witnessed significant developments in the soybean market, including escalating trade tensions between China and the United States and China's shift to importing soybeans from Brazil and Argentina. Futures prices have also risen due to drought waves in major agricultural areas in South America, while the Gulf region has experienced inflationary pressures due to rising feed costs. Locally, the Saudi government discussed new strategies to enhance food security, including the feasibility study of producing soybean meal locally and developing advanced grinding lines. Some companies have also entered into international partnership agreements to secure stable supplies, and trading platforms have shown interest in providing financial tools to hedge against price fluctuations, amid ongoing interest in monitoring global market indicators.

Saudi regulatory bodies, such as the Capital Market Authority and the Ministry of Environment, Water, and Agriculture, play a significant role in monitoring the feed market and ensuring the stability of food supplies. The government supports the development of modern agricultural technologies and investment in local feed projects. They also closely monitor the impact of global price fluctuations on the local market and work to enact policies aimed at enhancing food security, diversifying import sources, and encouraging the search for sustainable local alternatives. Regulatory bodies also provide periodic data and reports on the performance of agricultural and food companies, helping investors and stakeholders understand changes in the sector.

Regular financial analysis of companies linked to soybeans is essential for understanding sector dynamics and assessing risks and opportunities. Monitoring quarterly earnings results, growth indicators, debt levels, and dividend policies reveals how well companies can adapt to fluctuations in global commodity prices. Official financial reports issued by Tadawul and the Capital Market Authority provide accurate data on company performance, assisting analysts and investors in making informed decisions. It is also important to monitor companies' strategies for hedging risks, developing new product lines, and expanding local and regional markets.

Trading platforms in Saudi Arabia and the Gulf provide various financial tools to monitor and analyze agricultural commodity markets, including soybeans. These tools include Contracts for Difference (CFD), futures contracts, and hedging products that allow companies to manage price volatility risks. It is advisable to refer to reliable sources such as the Chicago Board of Trade for soybean contracts, reports from the U.S. Department of Agriculture (USDA), and commodity analysis platforms like Bloomberg and Reuters. Local and international trading platforms contribute to increasing investor awareness and providing opportunities to diversify investment portfolios, while adhering to regulatory controls and consulting licensed professionals before making any decisions.