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Soybeans Dip After Hitting Four-Year High, Crop Faces Selling Pressure

October 27, 2020 at 16:05 by Andrew Moran

Soybean futures are retreating slightly from their best levels in more than four years as the crop faces selling pressure. The agricultural commodity has been posting a tremendous rally, attempting to test $11 a bushel. While foreign demand is trending upward, US and Brazilian output continue to remain bullish, which could limit prices for the remainder of 2020 or heading into 2021.

January soybean futures slipped $0.015, or 0.14%, to $10.82 per bushel at 15:48 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean recently enjoyed a weekly gain of 2.5% and it is poised to finish the month close to 10% higher. Year-to-date, the agricultural commodity is up more than 13%.

According to the US Department of Agriculture (USDA), 83% of soybeans were harvested, falling short of market expectations, but it is still above the five-year average of 73%. Seventy-two percent of corn was harvested, while 85% of US winter wheat was planted.

For now, investors are concentrating on overseas demand. American exporters sold 120,700 tons of soybeans to unknown buyers, as well as 135,000 tons of soymeal to the Philippines.

In another USDA report, export inspections of soybeans surged to 2.66 million metric tons in the week ending October 22. This is up from 2.32 million tons in the previous week and 1.58 million tons at the same time a year ago. This is an important metric because it indicates how much soybean is being shipped to foreign markets.

Overall, since the beginning of the marketing season on September 1, the USDA has assessed 14.3 million metric tons of soybeans for offshore delivery, up from 8.07 million metric tons year-over-year.

Brazil, the world’s biggest soybean producer, has been experiencing heavier-than-normal rainfall in recent days. This is expected to help the South American country’s plantings, which is only 23% complete so far. That said, analysts think this is beneficial for China since it would have more options.

Right now, China has an advantage when it comes to soybean buying. The Brazilian real has been the worst-performing currency in Latin America, the US dollar is weakening, and the Chinese yuan is appreciating against the greenback. However, soybean prices are trading at their best levels since summer 2016.

In other agricultural commodities, December corn futures edged up $0.005, or 0.12%, to $4.1825 per pound. December wheat futures added $0.0375, or 0.6%, to $6.2375 a bushel. January coffee futures picked up $0.01, or 0.94%, to $1.0765 a pound.

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