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Soybeans Rally on Strong Foreign Demand, Coronavirus Vaccine

November 10, 2020 at 16:25 by Andrew Moran

Soybean futures are rallying beyond the $11 mark on Tuesday as strengthening foreign demand and optimism over the coronavirus vaccine lifted the broader agricultural commodities market. China has ostensibly been the main driver of the soybean market, with the latest data pointing to Brazilian and American shipments headed to the world’s largest crop consumer. Is $12 next for the bull run?

January soybean futures surged $0.075, or 0.7%, to $11.18 per bushel at 15:07 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices are coming off a 6% weekly gain, adding to their month-to-date increase of nearly 10%. Year-to-date, crop prices are up 17%.

According to the General Administration of Customs, China’s soybean imports spiked 41% in October from the same time a year ago. The country imported 8.69 million tons of soybeans last month, up from 6.18 million tons in October 2019 as Brazilian cargoes cleared and US shipments arrived.

It should be noted, however, that China’s imports were down from 9.8 million tons in September. The month-over-month drop was caused by Brazil’s dwindling supplies amid the harvest season coming to an end.

The consensus is that the buying pace will likely slow down in the coming months since Chinese crushers already booked plenty of Brazilian and US soybeans throughout the year.

The US Department of Agriculture (USDA) confirmed on Monday that American exporters sold 123,000 tons of domestic soybeans to unknown destinations. Market observers usually note that these unknown destinations are typically China.

USDA researchers forecast that Chinese soybean purchases will likely slow down to 95 million metric tons in the 2020–2021 marketing season, even though the country’s pig herd starts to recover. China lost about 50% of its swine population due to the African Swine Flu. At the same time, analysts say that China will need to abide by the provisions inside the phase one trade agreement that the current administration signed in January that requires Beijing to buy 80 million metric tons of US soybeans by December 2021.

In its weekly crop progress report, the USDA found that the domestic soybean crop harvest was 92% complete, below the market forecast of 94%.

Soybeans joined the broader market rally on Monday when Pfizer and BioNTech announced that they developed a coronavirus vaccine that is 90% effective. This generated euphoria after the highly infectious respiratory illness led to 50 million confirmed cases and more than 1.2 million deaths this year, resulting in the decimation of the global economy.

In other agricultural commodities, December corn futures picked up $0.0275, or 0.67%, to $4.1025 per pound. December wheat futures tacked on $0.045, or 0.75%, to $6.02 a bushel. January coffee futures slipped $0.008, or 0.75%, to $1.0605 per pound.

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