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Soybean Rallies on Chinese Demand, Higher Taiwan Imports

October 17, 2018 at 14:26 by Andrew Moran

Soybean futures are extending their gains midweek after reaching their best levels in two months. Soybean prices are rallying on a series of positive news that should spark a significant rally in the commodity, which is already on track for an immense weekly gain.

November soybean futures rose $0.02, or 0.23%, to $8.886 per bushel at 14:43 GMT on Wednesday on the Chicago Board of Trade (CBoT). Earlier this week, soybean topped its best level since the middle of August, lowering its year-to-date decline to under 10%. Over the last five trading sessions, soybean has advanced nearly 4%.

Bloomberg News reported that two additional US vessels loaded with domestic soybeans have departed for China. This signifies that Chinese buyers are still demanding soybean supplies, despite the escalating trade war that has targeted US soybeans since the summer. Since South American inventories are beginning to diminish, and the next round of buying will not happen until early next year, China may have no other alternative but to turn to the US market.

According to official state statistics, Chinese soybean reserve demand remained strong for the fourth consecutive week.

Meanwhile, in an effort to improve relations with President Donald Trump and boost trade, Taiwan has announced that it will import 30% more soybeans from the US in 2018 and 2019. Taiwanese trade officials and business leaders confirmed that Taipei will acquire 3.9 million tons of soybeans, totaling $1.56 billion. This will benefit states like Minnesota and Iowa, two jurisdictions that have been hit hard by the US-China trade spat.

But, as demand for US soybeans rejuvenates, the US Department of Agriculture (USDA) reported on Monday that the domestic harvest was 38% complete, below the five-year average of 53% and just above the previous week’s 32% completion rate.

In other agricultural commodities, December corn futures tacked on $0.05, or 0.13%, to $3.757 per pound. December wheat futures dipped $0.05, or 1.05%, to $5.18 a bushel. January orange juice futures fell $0.05, or 0.03%, to $1.433 per pound. December coffee futures added $0.036, or 3.06%, to $1.211 a pound.

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