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Soybean Slumps As Chinese Imports Plunge in March on Coronavirus

April 14, 2020 at 15:50 by Andrew Moran

Soybean futures are trading lower on Tuesday after new data found that China’s imports of the agricultural commodity slumped last month due to shipment delays and the coronavirus disruption. After recording some modest gains in recent weeks, prices are taking a breather and slipping below the $8.50 mark.

May soybean futures tumbled $0.0725, or 0.85%, to $8.47 per bushel at 15:31 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean has declined more than 1% over the last week, but it has advanced nearly 3% this month. Overall, the crop is down about 11% year-to-date.

Using official customs data, Reuters is reporting that China’s soybean imports plummeted 13% in March from the previous year. The world’s top buyer of soybeans imported 4.28 million tons of the oilseed, down from 4.91 million tons in March 2019. This is the lowest level since February 2015.

In the first quarter, shipments came in at 17.79 million tons, up 6.2% from the same time a year ago. In the first two months of this year, China’s soybean imports were 13.51 million tons, up 14.2% year-on-year.

Brazil, which has become a top exporter to China, experienced heavy rainfall that delayed the harvest and shipments of soybeans. This led to smaller-than-expected arrivals of soybeans. Although China has pledged to keep up with the provisions inside the first phase of a US-China trade agreement, importers have been turning to Brazil because prices are cheaper and the real has taken a hit.

The main factor, however, was the coronavirus pandemic that shut down much of China. Due to the supply shortage, some crushers either shut down or curtailed operations, which has led to inventories sliding to record-low levels. Plus, demand has cratered due to the African swine flu that has reduced the nation’s pig herd by about 40%.

The US Department of Agriculture (USDA) confirmed last week that Japan is expected to increase its soybean purchases over the next two marketing years. The USDA projects that imports will reach 3.386 million tons in 2019–2020 and 3.405 million tons in 2020–2021. Tokyo currently buys around three million tons.

In other commodities markets, May corn futures shed $0.04, or 1.21%, to $3.275 per pound. May wheat futures declined $0.07, or 1.26%, to $5.485 a bushel. May orange juice futures soared $0.0275, or 2.63%, to $1.073 per pound.

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