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Soybean Rises on Improved Chinese Import Outlook

January 11, 2019 at 16:11 by Andrew Moran

Soybean futures are rising modestly at the end of the trading week, buoyed by an improved import outlook from the world’s second-largest economy and biggest consumer of the agricultural commodity. Soybean prices were further lifted on Brazil slashing its crop forecast by more than five million tonnes in the 2018–2019 harvest.

March soybean futures rose $0.017, or 0.19%, to $9.085 per bushel at 14:07 GMT on Friday on the Chicago Board of Trade (CBoT). Soybean prices are poised for a weekly decline of 1.5%, but the are up nearly 2% so far in 2019.

Amid the 90-day trade truce between the US and Washington, Beijing is increasing its estimate for soybean imports for the year ending September. According to the China National Grain and Oils Information Center, China is projected to purchase 87 million tons, up three million from the previous estimate in December. The center did note that Beijing may purchase an additional two million tons this month after importing approximately three million tons in December.

US Department of Agriculture (USDA) data shows that Chinese imports of US soybeans have steadily increased since the 2010–2011 season, but it dipped this harvest because of the trade war. This could be reversed as officials say that talks are progressing and that a deal is imminent.

Meanwhile, Brazil, which saw more business from China this year, is slashing its forecast for the soybean harvest this season. According to Agroconsult, an agribusiness consultancy, Brazil cut its projections by 5.2 million tonnes to 122.8 million.

The primary issue for soybean traders right now is the lack of new data readily available. Because of the partial US government shutdown, some departments and agencies are either not publishing new statistics or are slow to release them due to lower manpower. This is affecting both soybean investors and farmers because changing data levels are phased into pricing levels.

Sal Gilbertie, president and chief investment officer at Teucrium Trading, told MarketWatch:

United States government-issued agricultural reports are considered the information gold standard by traders throughout the world. The longer the shutdown lasts, the more the data will have to catch up when reports are finally released.

This could result in higher volatility and extreme price movements once all the data is released at once.

In other agricultural markets, March corn futures tacked on $0.225, or 0.6%, to $3.785 a pound. March wheat futures added $0.0925, or 0.36%, to $5.22 per bushel. March orange juice futures dipped $0.05, or 0.45%, to $1.215 per pound.

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