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Soybean Plunges As Chinese Imports Fall, EU Threatens US

February 19, 2019 at 18:35 by Andrew Moran

Soybean futures are plunging on Tuesday on new data that found Chinese imports of US soybeans fell last month. The agricultural commodity is also slipping on the European Union (EU) threatening to stop buying US soybeans, Canadian farmers transitioning to other crops, and soybean storage rotting.

May soybean futures tumbled $0.11, or 1.19%, to $9.105 per bushel at 16:34 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices are off to a slow start this month, shedding nearly 2%, though they are still up a tepid 0.4% so far in 2019.

According to the General Administration of Customs, China’s soybean imports declined 13% in January, compared to the same time a year ago. Last month, Beijing acquired 7.38 million tonnes of soybeans, down from 8.48 million tonnes in January 2018. The decrease in imports is being blamed on hefty duties that were slapped on shipments from the US.

In recent months, US and European trade representatives have been trying to iron out a new trade deal. But EU Commission President Jean-Claude Juncker warned that the trade bloc will stop buying US soybeans liquid gas if European automobiles are hit with tariffs.

Juncker told Stuttgarter Zeitung, a German newspaper:

Trump has given me his word that there will be no car tariffs for the time being.

I believe him. However, should he renege on that commitment, we will no longer feel bound by our commitments to buy more US soya and liquid gas.

For the last several months, farmers have been storing their inventories in storage, since they do not have a place to sell their supplies. As a result, farmers are either spending exorbitant storage costs or they are witnessing their stockpiles rot. This has led to dozens of bankruptcies across the country over the last several months.

Because prices are about half from their 2014 peak of $15, soybeans are beginning to lose their appeal, especially with uncertainty surrounding the market amid the US-China trade war. North of the border, Canadian farmers are transitioning away from soybeans and into more profitable crops, like canola and wheat.

Bill Campbell, the president of Winnipeg, Manitoba-based industry group Keystone Agricultural Producers, told Bloomberg:

I’m probably going to switch into some oats and barley and maybe a little bit of canola and wheat. We’re seeing a significant drop in price when we get them to the elevator. It boils down to economics.

In other agricultural commodities, May corn futures slid $0.0525, or 1.37%, to $3.775 per pound. May wheat futures tumbled $0.135, or 2.66%, to $4.935 a bushel. May orange juice futures climbed $0.03, or 2.65%, to $1.1825 a pound.

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