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Soybean Futures Rise As Final US Shipment Heads to China Before Tariff Hike

June 29, 2018 at 16:02 by Andrew Moran

Soybean futures are rallying as the final US shipment of the agricultural commodity heads to China before tariffs jump. Soybean prices have been battered in recent weeks, slumping more than 15% over the last month. As the first half of the year comes to an end, a bulk of agricultural commodities have fallen.

July soybean futures advanced $0.055, or 0.64%, to $8.667 per bushel at 15:19 GMT on Friday on the US ICE Futures exchange. Soybeans have tumbled to their worst levels in nearly a decade amid the tense trade negotiations between the world’s two largest economies. Soybeans will suffer a weekly decline of 3%. Year-to-date, soybeans are down about 12%.

On Thursday, the US Department of Agriculture (USDA) reported that Chinese soybean imports have declined 2.4% to 100.5 m mt in 2018–2019. The US government said that soybean export sales reached 358,000 tonnes last week and new-crop transactions stood at 642,300 tonnes. The latest numbers came as China cancelled 120,000 tonnes of purchases.

As part of its retaliatory efforts, China confirmed it will slap a 25% tariff on more than 500 US goods, including soybeans, on July 6. This is expected to significantly punish the agricultural sector because China is the biggest consumer of US soybeans.

cargo of US soybeans was shipped to China’s state grain stockpiler. It is scheduled to arrive in China by Thursday, which is the final delivery before the import duty goes into effect. There are two trends that might happen in the coming years that could impact the domestic agricultural sector: China boosts domestic production or Beijing buys more from Brazil – both developments are just beginning.

With the first half of 2018 winding down, it is time to examine the performance of the commodities market. Sugar fell 20%, live cattle tumbled 13%, coffee slipped 8%, copper dropped 9%, and aluminum plummeted 13%. Meanwhile, steel has surged 36%, cocoa spiked 31%, orange juice rose 14%, wheat soared 10%, and cotton increased 8%.

December corn futures are up $0.07, or 1.91%, to $7.00 per pound. September wheat futures swelled $0.195, or 4.08%, to $5.032 a bushel. September orange juice futures dipped $0.045, or 0.28%, to $1.60 a pound.

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