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US Shipments to China, Pakistan’s Imports Send Soybean Futures Higher

August 7, 2018 at 17:31 by Andrew Moran

Soybean futures are looking to initiate a rally this week after new government data found China is still importing US soybeans. The commodity also benefited on analysis that the world’s second-largest economy may still need to import US soybeans in the coming weeks because there is not enough supply.

November soybean futures rose $0.08, or 0.9%, to $9.015 per pound at 16:34 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices, which have surged nearly 4% over the last month, dipped below nine cents to kick off the trading week before paring those losses.

Year-to-date, soybean prices are down 7.6%, but they have experienced most of those losses since May.

Despite initial reports that the final US shipment of soybeans was sent to China last month, new reports suggest another shipment of US soybeans was set sail for Beijing last week, the first in three weeks. This may perhaps hint that the economic powerhouse is still importing the commodity.

For weeks, it had been anticipated that China would slash imports of US soybeans and import more from Brazil. While it is true that Brazil has increased production of soybeans, experts warn that the South American nation will be unable to keep up with the demand. The Chinese government has also launched a five-year plan to boost domestic output of soybeans by subsidizing farmers.

The report comes after Hamburg-based oilseeds analysts Oil World said on Tuesday stated that China will likely need to start acquiring US soybeans in the coming weeks, even in the middle of a trade war. Because other regions cannot supply enough soybeans to China, it will be prompted to resume its purchases.

China has to resume purchases of U.S. soybeans. The South American supply shortage will make it necessary for China, in our opinion, to import 15 million tonnes of U.S. soybeans in October 2018/March 2019, even if the current trade war is not resolved.

There is a risk that China will have to cut back its livestock production, implying higher prices on the domestic market.

Meanwhile, the US Department of Agriculture (USDA)’s Global Agricultural Information Network (GAIN) report found that Pakistan will need to import a record number of soybeans. The US government forecast that Pakistan will import as much 2.5 million tonnes in the 2018–2019 season.

Higher imports are a reflection of a tariff structure that favors soybeans over soybean meal and growing demand from Pakistan’s feed sector.

The development and modernization of Pakistan’s poultry and dairy sectors is generating new demand for high-protein feed ingredients as inclusion of soybean meal in rations increase and overall demand rises.

With China, the European Union (EU), Canada, and Mexico retaliating against US tariffs, the main target has been the domestic agriculture sector, which has been battered and beaten for much of 2018.

In other agricultural commodities, December corn futures advanced $0.04, or 1.11%, to $3.65 per pound. September wheat futures tumbled $0.06, or 1.04%, to $5.685 a bushel. September orange juice futures plunged $0.021, or 1.26%, to $1.643 a pound.

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