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Soybean Slips Over Chinese Buying Uncertainty

July 23, 2019 at 15:00 by Andrew Moran

Soybean futures are trading lower on Tuesday over increasing uncertainty regarding Chinese purchases of the agricultural commodity. Since the world’s two largest economies reached another trade truce last month, it has been a case of contradictory reports and findings of China’s buying trends. The latest developments are no different.

September soybean futures shed $0.055, or 0.61%, to $9.0025 per bushel at 14:43 GMT on Tuesday on the Chicago Board of Trade (CBoT). Despite recovering in the second quarter from a horrid start to 2019, prices have traded relatively sideways over the last month, dipping just 0.2%. Year-to-date, soybean is up 0.8%.

Bloomberg broke the story on Monday that Chinese government officials are in talks with state and private soybean buyers to increase purchases of US supplies. Citing people close to the situation, Beijing sat down with companies to consider plans to waive retaliatory tariffs on US imports and boost purchase volumes. The government is now seeking feedback from companies pertaining to the proposal.

This is all part of the country’s goodwill gestures and response to America’s good faith. In recent weeks, the White House has excluded a growing number of Chinese products from tariffs and is considering minimizing the punishment inflicted on various Chinese firms, including most notably Huawei Technologies.

China, the world’s biggest buyer of US soybean, has seen its imports crater since the tariffs were imposed. For the last year-and-a-half, Chinese imports have not topped two million metric tons. Prior to the trade war, purchases typically topped five million metric tons to as high as eight million.

But Reuters is reporting when speaking with analysts that China buying soybeans is based on more “rumor than fact.” In other words, US farmers are going to only believe it when they see it. Until then, they are transitioning away from soybean and into other commodities.

In other commodity markets, August corn futures tumbled $0.0225, or 0.53%, to $4.2425 per pound. September wheat futures dropped $0.04, or 0.82%, to $4.8325 a bushel. September orange juice futures plunged $0.013, or 1.26%, to $1.0175 per pound.

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