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Soybean Rallies As Supplies Face Flood Risk, Demand Surges

April 1, 2019 at 16:36 by Andrew Moran

Soybean futures are rallying to kick off the trading week, buoyed by risks to supplies and a surge in demand. With spring rains threatening half of the US soybean crop in the Midwest and China importing more from the US amid trade negotiations between the world’s two largest economies, it might be a big week for the agricultural commodity.

May soybean futures rose $0.13, or 1.47%, to $8.9725 per bushel at 16:02 GMT on Monday on the Chicago Board of Trade (CBoT). Soybean has had a difficult start to 2019: prices posted a weekly loss of 1.1% last week, suffered a quarterly decline of 1.1%, and is down nearly 1.2% year-to-date.

On Monday, the US Department of Agriculture (USDA) announced that China recently purchased 828,000 tonnes of soybeans, making it the second sale since the two sides finished their latest round of negotiations last month. The deal is slated for the 2018–2019 marketing season, which ends on August 31.

There are not too many reports regarding the status of US-China trade talks. President Donald Trump did note last week that discussions were going well, adding that the US would not accept anything other than a “great deal.” Beijing has shown good faith by suspending tariffs on US automobiles and parts, while Washington has reciprocated by postponing hikes to tariffs.

But it looks like certain farmers may not take advantage of the renewed demand. The USDA projects that South Dakota farmers are transitioning away from soybeans and into corn, barley, oil sunflowers, and dry peas. The Mount Rushmore State is forecast to slash its output by 8% to 5.2 million acres.

For those remaining soybean farmers, they might have a late start to the planting season. Because weather forecasts show that parts of the Midwest are at risk of flooding, it is estimated that as much as 60% of soybean acres are under risk of flooding. This could result in delayed planting.

In other agricultural commodities, May corn futures climbed $0.0525, or 1.47%, to $3.6175 per pound. May wheat futures tacked on $0.085, or 1.86%, to $4.6625 a bushel. May orange juice futures soared $0.04, or 3.34%, to $1.24 a pound.

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