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Soybean Slides Amid Steady Supply of Industry News

April 9, 2019 at 16:54 by Andrew Moran

Soybean futures are sliding on Tuesday as a plethora of industry news is driving trading patterns. Investors are combing through multiple reports about supply, demand, and production levels, looking to find the next opportunity in futures contracts. Surprisingly, the US-China trade war did not have an impact on soybean prices at the beginning of the trading week.

May soybean futures tumbled $0.01, or 0.11%, to $8.975 per bushel at 16:16 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean has had a disappointing start to 2019, slipping more than 1% year-to-date and plunging 13% over the last 12 months.

The US Department of Agriculture (USDA) published multiple industry reports this week, suggesting interesting times are ahead for key soybean markets.

African swine fever has crippled the Chinese agricultural market, leading to farmers to slaughter thousands of pigs to contain the spread of the disease. As a result, there has been a diminished demand for soybeans in China because of swine fever. Vietnam is another market impacted by African swine fever. The country will increase its soybean imports, but it will do so at a slower pace moving forward until the issue has subsided.

Egypt could offset the declines in Vietnam as the nation’s soybean imports for 2019–2020 are projected to jump 14% from the previous year. And this is good news for US exporters.

US-origin soybean exports to Egypt have risen to record levels since the onset of the US-China trade tensions and China’s imposed retaliatory tariffs on US soybeans.

With Brazil-origin soybeans commanding a premium, combined with drought-induced tight supplies in Argentina, Egyptian traders and crushers are turning to the highly efficient and affordable US soybeans.

Should global demand increase, Ukraine will not be able to take advantage of the renewed purchases. Because of changes to national tax legislation that makes farming less profitable, Ukrainian farmers will plant fewer soybeans in the coming market year. The USDA estimates that the planted area will come in at 1.6 million hectares, a 11% drop compared to the previous year, and production will total 3.5 million tonnes, a 22% decline from the last market year.

Argentina continues to make its agricultural commodities push, particularly in the soybean sector. The South American country is expected to expand its output by 13% this year.

Brazil, meanwhile, has witnessed its soybean sales fall, mainly because of a decrease in port premiums. This could result in a paucity of storage space for winter inventories.

In other agricultural markets, May corn futures edged up $0.0025, or 0.07%, to $3.6025 per pound. May wheat futures fell $0.05, or 1.07%, to $4.60 per bushel. May orange juice futures plunged $0.0285, or 2.56%, to $1.086 a pound.

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