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Soybeans Extend Skid As Prices Hit One-Month Low on Coronavirus Fears

January 29, 2020 at 18:18 by Andrew Moran

Soybean futures are extending their losing streak midweek as fears about the Wuhan coronavirus affecting Chinese demand sent the agricultural commodity lower. Should Beijing fail to meet demand levels outlined in the phase one trade deal, the market could soon be flooded with soybeans as both the US and Brazil increase output.

March soybean futures tumbled $0.035, or 0.39%, to $8.9125 per bushel at 16:55 GMT on Wednesday on the Chicago Board of Trade (CBoT). Soybean prices are trading at their lowest levels in more than a month, adding to their 2020 losses of about 7%.

The US Department of Agriculture (USDA) surprised commodity markets last week after it reported export sales of US soybeans surged 23% from the previous week and 59% from the four-week average. But traders will keep a close eye on the export data in the coming weeks.

Preliminary data suggest that fewer amounts of pork were consumed during the Chinese New Year, which has been extended until February 2. The decline was attributed to people avoiding public places out of concern of contracting the coronavirus. As a result, Chinese soybean crushers fear that there will be a short-term decline in domestic soybean meal sales.

It has also been reported that there is an abundance of soybean inventories in the market. Analysts estimate that roughly eight million metric tons are available for crushing, something that could discourage soybean buyers from adding to their stockpiles. Over the next week, facilities will either stay closed for several more days or limit crushing volumes.

The other major issue is that rural pig farmers cannot sell their animals to potential buyers due to travel restrictions in place throughout the country, making it harder to transport these animals.

Meanwhile, it was recently reported that Brazilian farmers will have a record soybean harvest this marketing season. Industry observers anticipate a harvest of 124.3 million, up from 119 million mt last year. However, farmers have harvested only 4.2% of their planted area as of January 23, down from 13% at the same time a year ago amid playing delays.

For now, bargain buyers will likely prevent soybean prices from slipping even further.

In other agricultural markets, March corn futures shed $0.0275, or 0.71%, to $3.8375 per pound. March wheat futures fell $0.0825, or 1.45%, to $5.615 a bushel. March orange juice futures picked up 0.60 cents, or 0.62%, to 96.95 cents per pound.

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