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Soybeans Edge Lower on New USDA Quality Controls

December 20, 2017 at 18:01 by Andrew Moran

Soybean futures are trading lower midweek after the US government announced it would be imposing stricter quality controls on exports heading to China. The commodity has had a down year, and analysts are expecting soybeans to continue trading sideways in 2018.

January soybean futures dipped $0.075, or 0.08%, to $9.552 per bushel at 16:34 GMT on Wednesday on the Chicago Board of Trade (CBoT). Soybean prices are settling at their lowest levels since the beginning of October. Year-to-date, soybean has slipped nearly 4%.

On Wednesday, the US Department of Agriculture (USDA) announced that it will begin to institute stricter quality controls on soybean exports to China. The new rules came in response to a request from the Chinese government, which could result in a reduction in US soybean shipments.

According to the USDA, exports with impurity levels that dip below a new standard of 1% will be given priority shipping, but soybeans that rise above that threshold will be delayed from shipping until additional cleaning is performed. The latest standards will go into effect January 1.

China, which submitted the request earlier this month, is the biggest consumer of US soybean exports. In 2016, Beijing purchased $14.2 billion from the US, representing about one-third of the country’s supplies. But some analysts are warning that the US may experience a decrease in sales because some US exporters will suffer a premium for supplies to meet higher requirements.

The announcement came after Angel Commodities released new analysis that projects soybean prices will trade sideways for the next several trading sessions. This is due to reports that mills have ample inventories, which will hit the level of purchases.

Brazil appears to be unfazed. Reuters is reporting that Brazil soybean exports have been quite active since November. Despite this period being a quiet time for the nation’s soybean exports, record-high crops were harvested, and 2.4 million tonnes of the oilseed is already on the docket. In 2017, corn and soybean output reached 30 million tonnes more than 2015’s total production.

March corn futures rose $0.02, or 0.58%, to $3.495 a bushel.

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

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