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Soybean Tops $9 on USDA Estimates, Chinese Purchases

October 1, 2019 at 14:47 by Andrew Moran

Soybean futures have topped $9 and are trading at their best levels in two months, driven by a recent supply estimate by the US government and reports of Chinese purchases of the American agricultural product. It was a rough summer for soybean prices, but they have steadily climbed since the middle of last month. Is there more room for growth?

November soybean futures rose $0.03, or 0.33%, to $9.09 per bushel at 14:31 GMT on Tuesday on the Chicago Board of Trade (CBoT). In September, soybean soared 4.72%, lifting its year-to-date gain to just under 2%. Over the last 12 months, prices have rallied more than 6%.

The US Department of Agriculture (USDA) surprised investors with a smaller-than-expected projection for soybean inventories. According to the USDA, domestic soybean stockpiles came in at 913 million bushels, down by about 70 million bushels from the average. But supplies are still up 108% from the same time a year ago, mainly because of the decline in shipments to China and a delay in harvesting.

Ahead of next week’s US-China trade negotiations in Washington, Beijing purchased roughly 600,000 tonnes of Americans soybeans for shipment from November to January. This is part of the tariff-free quota that the government extended to importers last week, which allows up to two million tonnes.

Reportedly, as many as 10 cargoes of 60,000 tonnes of soybeans have been sold to private and state-owned enterprises (SOEs) China will now meet its supply shortfall for the remainder of 2019 and the remaining stocks will be stored in state reserves.

This comes soon after Wang Yi, state councillor and foreign minister, averred that both sides need to show signs of goodwill, which China has repeatedly done over the last 18 months. So far this year, Beijing has acquired 19 million tonnes of soybeans, close to surpassing its 20-million-tonnes commitment.

In other agricultural markets, November corn futures rose $0.02, or 0.52%, to $3.90 a pound. December wheat futures fell $0.0350, or 0.71%, to $4.9225 per bushel. November orange juice futures dipped 0.95 cents to 98.8 cents per pound.

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