Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Soybeans Add to Losses Despite US Shipments to China

August 15, 2018 at 15:28 by Andrew Moran

Soybean futures are adding to their losses midweek, despite US shipments of the commodity entering China. Investors are also paying attention to reports that Brazil’s soybean production may be threatened, a bearish industry report, and analysis that the US government’s soybean aid will depend on personal production.

November soybean futures tumbled $0.0475, or 0.54%, to $8.75 per bushel at 15:00 GMT on Wednesday on the Chicago Board of Trade (CBoT). Although soybean futures have climbed 2% over the last month, prices have slumped 4% in recent days, adding to their year-to-date losses of 11%.

For the first time since the tariffs went into effect, a US cargo of soybeans entered China. According to Reuters, the US shipment was stationed on China’s coast and will now be slapped with immense import duties. Another cargo, Star Jennifer, which has been anchored off the nation’s coast since the end of July, is expected to enter China soon.

Soybean is the biggest US agricultural export to China with an estimated value of $12.7 billion. Because of the trade disputes between the world’s two largest economies, it has been expected that Beijing will turn to Brazil for soybean, as well as increasing domestic output.

The Latin American country has boosted supplies, but farmers will face a new challenge after a judge moved to prohibit glyphosate, a critical weed to burn down herbicide, until additional toxicology studies are completed. In addition to the glyphosate ban, soybean farmers are having troubles with the nation’s crumbling infrastructure.

This comes as the US Department of Agriculture (USDA) issued a new World Agriculture Supply and Demand (WASDE) report that appears to be quite bearish for the US agriculture market. The WASDE reports that soybean inventories are forecast to be a record five billion bushels, 5% more than last month, and average prices will be $8.90, down 35 cents from July. The overall outlook is higher output levels, stockpiles, exports, and crush.

Market Analyst Alan Brugler with Brugler Marketing and Management said in the report:

All the weekly changes are accountable by the USDA reports on Friday. USDA is showing a record US soybean production up more than 200 million bushels. That bumped the ending stocks forecast to a really bearish 785 million bushels and of course the bean market didn’t take it very well.

Meanwhile, economists are attempting to calculate the US government’s proposal to bailout US farmers with a $12 billion aid package. Right now, it is difficult for economists to determine how much money farmers will receive, but it is believed that individual production, not a county average yield, will be the main factor.

In other agricultural commodities, December corn futures dipped $0.0175, or 0.46%, to $3.747 a pound. September wheat futures slipped $0.12, or 2.22%, to $5.297 a bushel. September orange juice futures tacked on $0.05, or 0.32%, to $1.562 per pound.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply