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Soybeans Plunge As Chinese Imports Slump in June, Favorable Conditions

July 28, 2020 at 16:05 by Andrew Moran

Soybeans plummeted on Tuesday as new data found that Chinese imports slumped in June. The agricultural commodity further slumped on the US government reporting favorable ratings for domestic soybeans. Brazil was also in the news on shipments accelerating on a depreciating currency.

November soybean futures tumbled $0.155, or 1.72%, to $8.8425 per bushel at 15:47 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices have dropped nearly 2% in recent sessions, bringing their year-to-date losses to more than 7%.

According to the US Department of Agriculture (USDA), 72% of soybeans were rated as good-to-excellent conditions, beating the median estimate of 69%. The USDA also rated 72% of domestic corn in good-to-excellent condition, which comes in better than what the market penciled in. USDA officials raised the possibility of a large harvest in the 2020–2021 marketing season.

In a separate report, the USDA confirmed more US soybean export sales to China, as well as Mexico. This is the tenth consecutive day that the USDA has confirmed soybean ships to either China or other unknown destinations. Most market observers tend to believe that the unknown destination is usually the world’s biggest consumer of soybeans.

China’s General Administration of Customs reported that soybean imports from the US declined 56% year-on-year last month. In June, Beijing imported 267,553 metric tons of soybeans from the US, down from 614,805 metric tons the same time a year ago. The country’s soybean imports from Brazil surged from 5.5 million metric tons in June 2019 to 10.3 million metric tons last month.

In total, China imported 11.2 million metric tons in June.

Due to its weakened currency, Brazil’s soybean shipments hit record highs in April and May. After the real crashed to an all-time low in May against the greenback – 5.89 – Brazil shipped 15.5 million metric tons in May and 16.3 million metric tons in April.

The US dollar recorded a modest rebound on Tuesday after cratering to start the trading week. The US Dollar Index, which measures the greenback against a basket of currencies, edged up 0.04% to 93.71. A lower buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.

In other agricultural markets, September corn futures shed $0.045, or 1.38%, to $3.205 per pound. September wheat futures fell $0.0425, or 0.81%, to $5.235 a bushel. November coffee futures dropped $0.012, or 1.09%, to $1.092 per pound.

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