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Soybeans Rebound From 10-Year Low Amid Record US Crop

September 20, 2018 at 14:21 by Andrew Moran

Soybean futures are rebounding from their worst levels in a decade on Thursday. Soybean, which has been in the middle of the escalating trade dispute between the US and China, has been tumbling this week on reports of a record US crop and Brazilian farmers speeding up soybean plantings. Soybean prices are now looking to avoid a noticeable weekly decline.

November soybean futures rose $0.0125, or 0.15%, to $8.2875 per bushel at 13:49 GMT on Thursday on the Chicago Board of Trade (CBoT). On Wednesday, soybean slumped to its lowest level since December 2008, adding to its year-to-date loss of 15%.

US soybean futures posted gains on technical buying and uncertainty surrounding the global market. Soybean also found support in the international financial markets, buoyed by the belief that the continuing US-China trade dispute will have less of an impact on the global economy than initially believed. Today, China is the world’s largest consumer of soybean.

According to the US Department of Agriculture (USDA), the US soybean crop will be a record in 2018. It reported that the US soybean harvest was 6% complete, higher than the five-year average of 3%.

Meanwhile, in Brazil, a market that is expected to become one of the biggest soybean exporters in the world, amplified its soybean plantings this week as farmers experienced favorable weather conditions and a positive market outlook. Producers are trying to take advantage of the premium prices, which are roughly 2% higher than CBoT prices, so they are attempting to speed up their output volumes.

The USDA noted last week that the US sold $12 billion worth of soybeans to China, but Brazil has already topped $20 billion this year.

Despite Beijing allocating its buying habits to Brazil and launching a five-year strategy to boost domestic production, the world’s second-largest economy is looking to slash its soy consumption. One way the country has been gradually achieving this has been to promote lower-protein feed for livestock and poultry, as well as decrease demand for soymeal feed.

CNBC highlighted how many companies are eliminating imported US soybean from their diets:

A feed mill owned by Beijing Dabeinong Technology Group Co, for instance, plans to eliminate imported U.S. soybeans from its feed mix by October, said Zhang Wei, a manager at the mill, one of China’s top farmers and feed makers. The firm will replace soy imports with more cornmeal and alternative protein sources, including domestically produced soymeal, which has typically been grown for human consumption.

In other agriculture commodities, December corn futures rose $0.025, or 0.72%, to $3.482 per pound. December wheat futures slipped $0.06, or 1.15%, to $5.165 a bushel. November orange juice futures tacked on $0.0105, or 0.72%, to $1.476 per pound. October sugar futures edged up 0.14 cents, or 1.3%, to 10.90 cents.

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