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Soybean Futures Dip on USDA Forecast, China’s Ample Supplies

October 23, 2018 at 15:53 by Andrew Moran

Soybean futures are dipping on Tuesday after the US government published a bearish forecast relating to the trade war with China, which, separate reports suggest, has ample supplies of the agricultural commodity for the coming months.

November soybean futures tumbled $0.0125, or 0.15%, to $8.57 per bushel at 15:39 GMT on Tuesday on the Chicago Board of Trade (CBoT). Over the last month, soybean prices have risen 1.25%, but they are still down more than 12% year-to-date.

According to the US Department of Agriculture (USDA), 2018 soybean planted acreage has totaled 89.6 million acres, a decline of one million acres from the previous year. However, the intensifying trade dispute with Beijing could cost the US nine million acres of soybeans as the world’s second-largest economy could shift its demand to Brazil.

Today, China still needs to rely on the US for soybeans because Brazil cannot keep up with the demand. Should a new trade deal fail, resulting in an escalating trade war, then it is evident that there will be a long-term transition for China to other markets.

And that’s bad news for American farmers, particularly if China can weather the storm.

The USDA further reported that 49% of the US soybean crop had been harvested, lower than the 51% the market had projected. Last week, just 38% of the domestic harvest was complete.

On Friday, Tang Ke, head of the Ministry of Agriculture and Rural Affairs, revealed at a press briefing that the nation maintains ample supplies of soybeans. Industry experts warn that China, the world’s biggest purchaser of soybeans, will face a shortage early next year as it reduces its imports. Beijing is not only turning to other markets for its needs, it has launched a five-year plan to boost domestic production.

In other agricultural commodities, December corn futures jumped $0.075, or 0.2%, to $3.702 per pound. December wheat futures slumped $0.0125, or 0.25%, to $5.06 per bushel. January orange juice futures shed $0.07, or 0.51%, to $1.365 a pound. December coffee futures surged $0.0315, or 2.4%, to $1.2045 per pound.

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