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Soybean Plunges 1% as US 2018–19 Soybean Exports Fell 4% in May

June 19, 2019 at 18:22 by Andrew Moran

Soybean futures are trading lower midweek as new data show that 2018–2019 US soybean exports fell 4% in May. Analysts are blaming the slide on the ongoing US-China trade dispute, which has crippled the domestic industry over the last year. There are also reports that Chinese buyers might cancel their recent orders, which is bad news for farmers because crops are in great condition and plantings are up.

August soybean futures tumbled $0.115, or 1.25%, to $9.025 per bushel at 17:48 GMT on Wednesday on the Chicago Board of Trade (CBoT). What may surprise observers is that soybean prices have pared all their losses on the year and have advanced roughly 1% year-to-date. Many of the agricultural commodity’s gains came in the last month, rallying more than 8%.

The US Department of Agriculture (USDA) reported that soybean exports in the 2018–2019 marketing year, which starts in September and ends in August, slipped 4% on the May estimate to 46.26 mt. Analysts are putting the blame on the lingering trade war between the world’s two largest economies.

For the week ending May 30, 2018–2019 soybean export commitments to China reached 13.6 million mt, down 53% from the same time a year ago. Also, US soybean exports to the rest of the world totaled 46.7 mt, down 16% from last year.

Last summer, China retaliated to US tariffs by imposing a 25% import levy on US soybeans. This resulted in US soybean exports to China to crash 80% from October to March. Beijing is either turning to Brazil for its soybean needs or is investing in its own agriculture sector to meet demand.

There are now fears that Chinese soybean buyers might cancel their orders because vendors are requesting American sellers to postpone July cargoes by one month. So far, six million tonnes have been shipped to China, but an additional seven million tonnes purchased prior to the breakdown in trade negotiations have yet to be delivered. Many state-owned firms are now attempting to roll roughly two million tonnes of July cargoes into August, which could be bad news for farmers suffering from floods in the Plains and soaring inventories.

While China would incur harsh penalties if it attempted to cancel orders, investors believe Beijing is just trying to buy some time if it decides to abandon the purchases altogether.

Recently, China stockpiled US soybean cargoes instead of crushing them.

In the end, American farmers would be deeply affected after the USDA released a positive report on corn and soybean crops. According to the federal government, soybean planting improved to 77% and most of it was rated excellent to good. For corn, 92% of the crop that was planted was rated good to excellent.

This comes as the soybean harvest in Argentina for the 2018–2019 season is 98.5% complete, up 2.4% from last week.

In other agricultural markets, July corn futures shed $0.0825, or 1.8%, to $4.4175 per pound. July wheat futures plunged $0.1225, or 2.26%, to $5.195 a bushel. August orange juice futures dipped 0.30 cents, or 0.3%, to 98.5 cents a pound.

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