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Soybean Plunges on Supply Outlook, Lower US Exports to China

October 10, 2018 at 16:23 by Andrew Moran

Soybean futures are plunging midweek on a bearish supply outlook and new data that found US exports to China have slumped. Despite posting mild gains over the past month, soybean prices have cratered more than 13% so far in 2018, stemming from the escalating trade war between the world’s two largest economies.

November soybean futures tumbled $0.155, or 1.8%, to $8.475 per bushel at 15:50 GMT on Wednesday on the Chicago Board of Trade (CBoT). This is one of the worst daily performances of 2018 for the commodity.

According to the Department of Commerce, total US exports to China reached $9.77 billion, widening the monthly decline to 8.2% and the trade deficit by 0.8%. Soybean exports led the list, falling by 28.2% to $2.58 billion; shipments did spike in May and June, but cratered in July once the retaliatory tariffs were imposed on US goods.

Because of the tense US-China trade dispute, American farmers are witnessing so-called refugee soybeans. While Midwest farmers are recording bumper crops, they have nowhere to sell their products. For instance, North Dakota farmers have relied primarily on China to purchase their output, but that has changed in recent months because of the 25% retaliatory levies on US soybeans.

Joe Morken, chairman of the North Dakota Soybean Council, told CNBC:

Seventy percent of the soybeans leave our state for the [Pacific Northwest], and virtually 100% of that goes to China.

On Thursday, the US Department of Agriculture (USDA) will release its supply and demand report for October, and analysts anticipate that the US will increase its corn and soybean yield and production levels. So far, 32% of American soybean has been harvested, falling behind market projections.

There have been reports of crop damage in the US plains because of heavy rainfall.

In other agricultural commodities, December corn futures dipped $0.02, or 0.55%, to $3.625 per pound. December wheat futures slipped $0.0325, or 0.63%, to $5.11 a bushel. November orange juice futures jumped $0.08, or 0.56%, to $1.432 per pound. December coffee futures shed $0.075, or 0.66%, to $1.124 a pound.

If you have any questions and comments on the commodities today, use the form below to reply.

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