Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Soybean Flat As Market Waits for Chinese Buyers

August 20, 2019 at 16:06 by Andrew Moran

Soybean futures are trading flat on Tuesday as commodity markets wait on China. The world’s largest soybean customer has a lot to consider for the remainder of the year, weighing its options with the US, Argentina, Brazil, and Russia. Investors are apparently also adopting a wait-and-see approach to futures trading based on currencies, supplies, and geopolitics.

November soybean futures edged up $0.25, or 0.03%, to $8.6675 per bushel at 15:39 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices have had a rough August, sliding just under 4%. Year-to-date, the agricultural commodity has slipped 3%.

For the remainder of the month, the soybean trade will rely on China.

As Beijing continues to grapple with the US in a crippling trade dispute, promising to no longer purchase American agriculture, the world’s second-largest economy is studying alternatives. Although analysts say that no other market can satisfy China’s immense demand, experts say that the country can depend on smaller markets in the fourth quarter. This would buy China some time on the trade front.

But who will benefit from an enormous customer like China? For the last year, China has imported soybeans from Brazil, but the South American country has been unable to satisfy demand. However, in the October-to-December period, China can import enough from South America, says the China National Grains and Oils Information Center, a state-backed think tank.

Zhang Liwei, a senior analyst at the group, told an industry conference that even if the two nations fail to reach a trade agreement in the coming weeks, China has ample supplies and can tap into state reserves to increase supplies.

With the Argentine peso cratering by 20% last week, would the Chinese think about shifting transactions from Brazil to Argentina? Reports suggest that Chinese crushers may only begin to purchase more Argentinian soybeans if the price spread is 40 cents lower than Brazilian inventories. It would boost the Argentine economy, which is the third-largest soybean exporter in the world, particularly as political turmoil grips the country.

Meanwhile, Russia looks to be an insufficient source to replace the US. Russian officials confirmed that farmers would only be able to expand soybean exports to China by as much as two million tons a year. This is a far cry from the 30 million tons China imported from the US prior to the trade spat.

Indeed, when China sneezes, the soybean industry catches a cold.

In other agricultural markets, September corn futures tumbled $0.05, or 1.34%, to $3.695 per pound. September wheat futures fell $0.085, or 1.8%, to $4.64 per bushel. September orange juice futures jumped $0.0135, or 1.43%, to 95.75 cents a pound.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply