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Soybean Futures Dip on Mixed Industry Data

November 21, 2018 at 14:45 by Andrew Moran

Soybean futures are posting modest losses midweek as US farmers are not catching a break in the middle of the trade war. In addition to seeing their inventories rot, new reports suggest that China is far from running out of the agricultural commodity as Brazil continues to ship record amounts to the world’s biggest consumer of soybean.

January soybean futures tumbled $0.10, or 0.11%, to $8.80 per bushel at 13:07 GMT on Wednesday on the Chicago Board of Trade (CBoT). Down 10% year-to-date, soybean prices are trying to rebound and avoid a weekly loss as they have already slipped 0.3% this week.

There are two trends occurring among American soybean growers: storage costs are soaring and crops are rotting. Farmers are paying up to 40% to store crops. It’s gotten so bad that these farms removed equipment from their barns just so they can store soybeans.

Not only are farmers unable to sell their soybeans to the world’s second-largest economy, their supplies are being damaged by unfavorable weather conditions.

So far this year, US farmers have planted nearly 90 million acres of soybeans, the second biggest in recorded history. They expected rising Chinese demand would give them better returns in 2018. However, these plans were halted once Beijing implemented a 25% retaliatory tariff on US soybeans.

Meanwhile, hopes that China would blink and return to purchasing American soybeans are fading. Despite reports that Beijing would run out of soybeans, China’s soybean reserves are plentiful, thanks to greater imports from Brazil. In the last two months, Brazil has exported nearly eight million tonnes of soybeans.

Perhaps seeing the writing on the wall, a growing number of US farmers are turning their backs on soybeans and returning to grains. Right now, farmers are yielding a little more than $7 per bushel of soybeans, which is way below the $8.50 needed to cover necessary costs.

In other industry news, during the 2018–2019 marketing year, export sales of soybeans for delivery to unknown destinations reached 4.5 million bushels, according to the US Department of Agriculture (USDA).

In other agricultural commodities, March corn futures tumbled $0.025, or 0.07%, to $3.72 per pound. March wheat futures shed $0.075, or 0.15%, to $5.075 a bushel. January orange juice futures fell $0.015, or 0.11%, to $1.39 a pound.

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