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Soybean Slides Below $14 As Investors Take Profits

January 19, 2021 at 14:27 by Andrew Moran

Soybean futures fell below $14 on Tuesday as the agricultural commodity experienced a bit of a correction and profit-taking. Thanks to soaring foreign demand and tighter supplies, soybean prices had been trading at their best levels in nearly seven years. Is this a case of modest near-term decline or a part of a broader downward trend for the commodities sector?

March soybean futures tumbled $0.1975, or 1.39%, to $13.97 per bushel at 12:08 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybeans are off to a roaring start to 2021, advancing close to 7% in the first few weeks of trading.

Investors had been combing through the latest General Administration of Customs data, highlighting the world’s top agricultural market had imported record amounts of soybeans and corn last year. Traders had already been aware of this, so it is more than likely that they priced this in. However, new figures suggest that Chinese crushers’ weekly pace of soybean cargo purchases surged to a four-month high in the week ending January 15, despite falling margins.

According to the National Oilseed Processors Association (NOPA), the monthly US soybean crush increased to the second-highest monthly level in December, finishing the busiest year of processing for the industry on record.

New Commodity Futures Trading Commission (CFTC) weekly commitments of traders report revealed that non-commercial traders, including hedge funds, reduced their net long positions in soybeans. The same report also noted that large speculators raised their net long positions in corn while adding to their net short positions in wheat.

In other news, S&P Global Platts reported that Brazilian exports plunged in January amid slumping inventories. Farmers had reportedly sold close to all of their old crop soybean stocks. In the first half of January in 2020, the South American country exported 630,000 metric tons. In the first half of January this year, Brazil only shipped 17,500 metric tons.

For now, farmers are concentrating on selling their crops domestically as they can get a better return on their investment. Despite the somber tone, soybean prices are still forecast to rise in 2021 due to tight supplies, strong demand, and delayed harvest.

In other agricultural markets, March corn futures slipped $0.0175, or 0.33%, to $5.2975 per pound. March wheat futures added $0.09, or 1.33%, to $6.845 a bushel. March coffee futures fell $0.0125, or 0.98%, to $1.269 a pound.

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