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Soybean Futures Tumble As China Expected to Cancel More US Shipments

July 5, 2018 at 16:14 by Andrew Moran

Soybean prices are adding to their losses on Thursday as the commodity shed more than two pennies. Industry insiders say China is canceling a significant portion of its 2018 orders once the additional tariff on US imports goes into effect on Friday, leaving the domestic agricultural sector concerned about the future.

November soybean futures tumbled $0.0225, or 0.26%, to $8.62 per bushel at 15:34 GMT on Thursday on the Chicago Board of Trade (CBoT). The agricultural commodity, which is down 15% since June, is on track for a steep weekly loss.

Chinese businesses will cancel most of the remaining soybeans that they have ordered from the US in the year ending August 31. China, the world’s biggest purchaser of US soybeans, has not taken delivery of more than 1.1 million metric tons of soybeans. The shipments are expected to either be canceled or resold once the extra tariffs are implemented.

At the same time, a small number of cargoes will pass because some shipments will be transferred to tariff-free state reserves – it is unknown as to how much the government holds of domestic and foreign soybeans. Beijing was slated to order close to 100 million tons of soybeans in the current marketing year.

As part of the trade war between the US and China, companies in the world’s second-largest economy have started to increase purchases from Brazil. However, industry observers warn that there might be a supply deficit because South American nations will be unable to meet the demand, causing China to continue buying “the world’s most expensive soybeans” from the US.

It was reported last week that the final US shipment of soybeans headed to China prior to the tariff hike.

Other agricultural commodities are rallying after the Fourth of July holiday. December corn futures advanced $0.025, or 0.07%, to $3.645 per pound. September wheat futures surged $0.1225, or 2.49%, to $5.0325 a bushel. November orange juice futures soared $0.035, or 0.21%, to $1.6805 per pound.

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