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Soybeans Recover From Last Week’s Slump As Crop Report Misses Forecasts

July 14, 2020 at 15:55 by Andrew Moran

Soybean futures are recovering from last week’s slump, driven primarily on the US crop missing forecasts. The US government released its latest report on the condition of soybeans, as well as corn and wheat. Although the bearish report does not signal a pending disaster, it did give analysts some pause and offered investors bargains in the futures market.

November soybean futures rose $0.065, or 0.74%, to $8.8175 per bushel at 15:39 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices had been trending lower in recent sessions, falling more than 2% last week. Although the agricultural commodity has risen about 4% since April, it remains down nearly 8% year-to-date.

According to a new report from the US Department of Agriculture (USDA), crop conditions were not as good as expected. It rated 68% of the US soybean crop in good-to-excellent condition, down from 71% in the previous week. Analysts had penciled in a reading of 70%. The USDA also rated 69% of the corn crop in good-to-excellent condition, while 68% of spring wheat was in good-to-excellent condition.

This report put pressure on commodity prices, allowing investors to receive bargains. Matt Ammermann, StoneX commodity risk manager, told Reuters:

Corn, wheat, and soybeans are seeing support from the reduced crop conditions ratings from the USDA coupled with bargain-buying interest after Monday’s price falls.

It is the second week in succession in which corn ratings have been cut and so some concern about recent dryness stress to US crops could start to be a market theme if this continues. But the deterioration in US crop conditions is certainly not a disaster and the USDA report is being weighed against forecasts of better weather for US crops.

In a separate USDA report, Brazil is projected to produce 130 million metric tons of soybeans in the 2020–2021 marketing season.

New General Administration of Customs data found that China imported a record amount of soybeans last month, soaring 71% from the same time a year ago. In June, Beijing imported 11.16 million tons of soybeans, up from 9.38 million tons in May. Brazilian exports accounted for much of the increase, with importers taking advantage of low prices and ample crush margins.

Early estimates suggest July imports will remain above normal levels, but August should see a decline.

In other agricultural commodities, September wheat futures picked up $0.0725, or 1.38%, to $5.32 per bushel. September corn futures edged up $0.01, or 0.3%, to $3.2975 a pound. September coffee futures shed 0.65 cents, or 0.66%, to 98 cents per pound.

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