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Soybean Extends Modest Losing Streak on Global Inventory Surprise

June 15, 2020 at 16:39 by Andrew Moran

Soybean futures are extending their modest losing streak to kick off the trading week. Soybean prices are trending lower, but the declines are tepid as investors take a wait-and-see approach regarding global inventories and Chinese demand. It is anyone’s guess on Wall Street if prices can top $9 this year.

August soybean futures dipped $0.0375, or 0.43%, to $8.675 per bushel at 16:18 GMT on Monday on the Chicago Board of Trade (CBoT). While the agricultural commodity did squeak out a boost last week, soybean has been falling during the last three trading sessions. Year-to-date, soybean is down 9%.

The US Department of Agriculture (USDA) warned in a recent report that there are ample global supplies for wheat, soybeans, and corn. The US government’s outlook affected many agricultural commodities, but the losses were minimal, especially for soybean because of China.

According to Bloomberg, China’s state-owned and private importers have stepped up their purchases, despite reports that Beijing is mandating buyers to curtail their acquisitions of American agricultural products. There has been falling processor margins, but export demand for soymeal remained strong. So far this month, Chinese buyers purchased at least ten cargoes due to growing demand, lower US prices, and a slumping dollar.

Ray Young, CFO of Archer-Daniels-Midland, says that the phase-one trade agreement between the US and China remains “on track.”

There was recent speculation that maybe China kind of ordered their state-run enterprises or stop buying, well, the reality of matters, we — the same week, we’ve been actually receiving orders in terms of shipping products over to China. So our counsel to people is that let’s look at the facts, and let’s avoid the speculation.

China has only bought $4.65 billion in US agriculture in the first four months of 2020. Under the phase-one deal, Beijing agreed to buy $36.5 billion this year. But analysts are anticipating a surge in the fourth quarter due to the Chinese economy potentially rebounding.

Meanwhile, large speculators trimmed their net short positions in soybeans in the week ending June 9, according to the Commodity Futures Trading Commission (CFTC).

In other agriculture markets, July corn futures fell $0.02, or 0.61%, to $3.28 a pound. July wheat futures were flat at $5.015 per bushel. August lean hog futures advanced 0.85 cents, or 1.56%, to 55.50 cents per pound.

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