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Soybean Poised for Third Straight Session Gain As Chinese Imports Rebound

March 11, 2020 at 15:58 by Andrew Moran

Soybean futures are on track for their third straight session of gains as new data suggest Chinese imports are on the rebound. With the world’s second-largest economy retooling, global financial markets are betting that China will begin to incrementally return to normal, and that could be a boon for the soybean market. But prices could hit a ceiling on a global supply glut.

May soybean futures advanced $0.0325, or 0.37%, to $8.795 per bushel at 15:37 GMT on Wednesday on the Chicago Board of Trade (CBoT). Although soybean prices have advanced this week, they are still down more than 3% over the last five trading sessions. Year-to-date, the agricultural commodity is down 8%.

According to the General Administration of Customs, soybean imports rose 14.2% year-over-year in the first two months of 2020 to 13.51 million tons. This is up from 11.83 million tons a year ago. While March may be a bleak reading for soybeans, analysts say imports will inevitably boost throughout the year so the country can meet the provisions inside the US-China phase one trade deal.

Reuters reported that China granted additional tariff exemptions for many crushers to import American soybeans. The exemption will be valid for a year from the day it is issued. However, this may not be enough to entice importers to buy US soybeans as prices are more attractive in Brazil.

The US Department of Agriculture (USDA) warned in a recent report that global soybean inventories will be much larger than initial forecasts because of bullish harvest expectations in Argentina and Brazil. In its February outlook, the USDA thinks world soybean stockpiles for the 2019–2020 marketing year will be 102.44 million tons, up from its original estimate of 98.86 million tons.

The two Latin American nations have been hit with a mix of high temperatures and dry conditions but expected rainfall over the next week will provide ample relief to the key soybean markets.

In other agricultural commodities, April corn futures tumbled $0.0275, or 0.73%, to $3.7475 per pound. April wheat futures plunged $0.0725, or 1.39%, to $5.15 a bushel. May orange juice futures picked up 1.1 cents, or 1.14%, to 97.30 cents per pound.

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