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Soybeans Rise on US-China Trade Optimism, Harvest Delay

October 22, 2019 at 16:25 by Andrew Moran

Soybean futures are rallying on Tuesday as investors were optimistic over potential greater US sales to China and domestic harvest being slower than usual. Chinese demand has impacted the soybean market for much of 2019, and the latest developments suggest that the trend will not subside to close out 2019.

November soybean futures tacked on $0.0275, or 0.29%, to $9.36 per bushel at 15:53 GMT on Tuesday on the Chicago Board of Trade (CBoT). Although prices have slumped in recent sessions, soybeans have advanced 5% over the last month and 9% over the last 12 months.

Investors are optimistic that Beijing will be importing more US soybeans in the coming months, but some traders still want to see inventories being loaded onto ships before celebrating. President Donald Trump tweeted on Sunday that China has started to purchase US agriculture, but several exporters say there is zero evidence to support this claim.

While China has agreed to buy up to $50 billion in American agriculture, Chinese importers have been booking new purchases of soybeans from Brazil. Reports say that China has ordered 480,000 tonnes, or $173 million, worth of Brazilian soybeans, which suggests that the world’s second-largest economy is not in a hurry to go on a US soybean buying spree.

The move is also turning heads since this is an unusual purchase for this time of the year with the US harvest coming in soon.

The soybean harvest was 46% complete, up from 26% in the previous week, according to the US Department of Agriculture (USDA). However, this is short of the five-year average of 64%.

Reuters reported that the National Development and Reform Commission (NRDC) issued tariff-free quotas to state-owned and private Chinese importers to import soybeans from the US. Reportedly, a total of 10 million tonnes was issued at the meeting.

Meanwhile, investors were bullish on reports that the soybean harvest is progressing slower than normal in the key growing areas of the Midwest. Winter weather conditions have already impacted the harvest over the last month, but even more wet weather and snow could further affect soybean output. Analysts anticipate that USDA’s November Supply/Demand Report will forecast soybean ending stocks below 400 million bushels, down from the original projection of 460 million bushels.

In other agricultural markets, November corn futures were flat at $3.87 per pound. November wheat futures dipped $0.0125, or 0.24%, to $5.2225 a bushel. January orange juice futures dropped 0.25 cents, or 0.25%, to 97.90 cents per pound.

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