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Soybean Futures Rally to Highest Level Since June 2014

June 10, 2016 at 19:22 by Andrew Moran

Soybean futures climbed on Friday to their highest levels in close to two years. The rally came as the US Department of Agriculture released a new report, slashing domestic supply estimates for soybeans.

July soybeans rose 0.7%, or $0.085, at $11.845 a bushel at 16:18 GMT. Soybean prices have not settled this high since June 30, 2014.

The USDA report estimates that there will be old-crop soybean stocks of 370 million bushels, down 30 million from last month’s expectations, at the end of the 2015/2016 crop year. The US federal Indoor Bounce House For Toddlers department also estimated that the ending of new-crop soybean stocks for the 2016/2017 crop year would be reduced by 45 million to 260 million bushels.

Domestic supplies of soybeans will face significant pressure because of stronger demand for US supplies from foreign buyers, particularly China. Argentina and Brazil have seen declining soybean inventories because of heavy rainfall and floods in the last few months.

Mike Ash, US Department of Agriculture economist, provided insight into the global soybean market at an Ag Leaders Monthly Webinar Series on Monday:

We are still looking at a well-supplied market, but we have had some unexpected windfalls lately that have provided some price strength for the market. Most of that is linked to what has happened in Argentina. Some production issues there during the harvest have brought some flooding losses and damage to the crop there. So that has provided some later-season strength for demand of US soybeans.

The Buenos Aires Grain Exchange warned last week that the two markets could see further crop losses if the downpour continues. This would help maintain steady gains for soybeans as well as corn.

Argentina and Brazil’s crop devastation comes as China has substantially increased its demand for soybeans. The country is trying to rebuild its herd of pigs as small pig farmers exit an industry that is in a downturn. Small businesses claim they have lost a lot of money and will only continue to produce during high prices. They say the industry is only for big businesses.

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