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Soybeans Slump As IGC’s Global Output Forecast to Climb 8%

June 26, 2020 at 17:27 by Andrew Moran

Soybean futures are slumping to finish the trading week, driven by a new industry report that forecasts global output would increase this marketing season. If the estimates are accurate, it would contribute to the first increase of global stockpiles in about four years. Brazil exports and Chinese buying are also in focus for investors on Friday.

August soybean futures tumbled $0.055, or 0.63%, to $8.6275 per bushel at 17:11 GMT on Thursday on the Chicago Board of Trade (CBoT). Soybean prices will record a weekly loss of 1.5%, adding to their year-to-date declines of just under 10%.

According to the International Grains Council (IGC), the global soybean crop will touch a record high 364 million tons in the 2020–2021 marketing season, up 8% from the current 2019–2020 season. Many markets are experiencing greater soybean output, but the US and Brazil are leading production.

The South American country is forecast to enjoy a record harvest for the second consecutive year, with 129.4 million tons. This falls short of the US Department of Agriculture (USDA)’s latest forecast of 131 million tons. The US soybean crop is expected to top 112 million tons.

Commodity investors will keep a lookout on next week’s USDA report that concentrates on quarterly grain stocks and American planted acres.

Anec, a grains exporter association, recently said that Brazilian soybean exports would reach 12.6 million tons this month, slightly less than the 13 million tons the market penciled in last week. Using shipping lineups data, Brazil will export three million tons in the week ending June 27.

Meanwhile, China continues to ramp up its purchases of soybeans. Last month, China bought 8.9 million metric tons of Brazilian soybeans, accounting for 94% of its monthly soy imports. Despite agriculture being a major component of the phase one trade agreement, US soybeans account for just 5% of monthly soy imports. Importers took advantage of the weaker real, which collapsed 35% between January and May.

That said, Brazil is unable to satisfy China’s ferocious soybean appetite, resulting in Beijing returning to the US market for its needs. Both sides have routinely expressed their support for the US-China trade agreement that was signed in January. But the relationship has been turbulent in the fallout of the public health crisis.

In other agricultural commodities, August corn futures dipped $0.0075, or 0.24%, to $3.165 per pound. August wheat futures plummeted $0.16, or 3.28%, to $4.7225 a bushel. September coffee futures picked up 0.25 cents, or 0.23%, to 94.35 cents a pound.

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