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Soybean Slips on Report China Not Expected to Face Shortage in Q4

September 5, 2018 at 13:32 by Andrew Moran

Soybean futures are slipping midweek after a new report found that China is not expected to face a shortage in the fourth quarter, suggesting that Beijing may not be as quick to come to a conclusion to its trade spat with the US. This comes as new data shows that the world is turning to Brazil for their soybean supplies.

November soybean futures dipped $0.03, or 0.36%, to $8.4125 per bushel at 13:48 GMT on Wednesday on the Chicago Board of Trade (CBoT). Soybean prices have advanced 0.5% over the last five trading sessions, but they are still down more than 17% since the beginning of June.

According to the China Soybean Industry Association, the world’s second-largest economy will not endure a soybean shortage during the October-to-December period, even as it is entrenched in a trade dispute with one of the largest soybean producers in the world. For years, the US has supplied more than one-third of China’s soybean imports, but the country has applied tariffs on these products, as well as ramping up domestic output.

But is China turning to Brazil for its soybean needs?

New data suggests that the South American country’s previous soybean crop is nearly sold out, while new crop sales have surged 21.5%. With bitter trade disputes, states are looking for another supplier of soybean, and Brazil appears to be the source. That said, experts are warning that Brazil may be unable to keep up with the international demand, particularly China, which is the planet’s biggest consumer of the commodity.

Whatever the case might be, most analysts agree that China’s purchases of US soybeans will decrease over the next marketing year. Speaking in an interview with a soybean industry executive, Reuters noted that China will replace nearly all of its soybean imports form the US with Brazilian products in the coming years.

In July, China slapped a 25% tariff on US soybeans, which brought down the number of purchases. However, it has been reported over the past month that US shipments are still making their way to the coast of China.

In other agricultural commodities, December corn futures shed $0.0125, or 0.34%, to $3.67 per pound. December wheat futures tacked on $0.005, or 0.09%, to $5.32 a bushel. November orange juice futures tumbled $0.017, or 1.1%, to $1.535 a pound. December coffee futures jumped $0.009, or 0.89%, to $1.023 per pound.

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