April 5: Soybean Prices Rebound as Trade Fears Subside

Panic hit the grain floor on Wednesday, but the hangover didn’t last too long. Soybean prices recovered a good chunk of what was lost in yesterday’s rout as traders took a breath.

Markets seem to understand that China’s threat of soybean tariffs remains just a threat for now. There still remains time for the U.S. and China to engage in bilateral trade talks.

Corn prices and soybean prices also saw a nice pop this afternoon thanks to the markets’ collective rebound. Let’s dive deeper into what was happening in Chicago at our daily recap of grain trading at Chicago Board of Trade.

Soybean Prices Find Some Gain

In Chicago, May soybean prices gained 16 cents to end the day just above $10.31. The July 2018 soybean contract added 15.5 cents and closed at $10.42 per bushel.

Two key factors pressed prices higher on Thursday. The obvious is that traders stepped back and realized that China’s threat remains just a threat for now. More important, bullish weather news out of Argentina has analysts expecting a drag on total output yet again.

The Buenos Aires Grain Exchange slashed its soybean production estimate by another 3.8% to 38 MMT. The 2 MMT cut from the exchange’s previous estimate is tied to dry weather than has seen yields decline by 24% to 58% year-over-year in certain regions, according to BAGE.

Based on that figure, the Argentine crop would be about 34% smaller than last year’s output.

Meanwhile, the USDA reported weekly export figures that were well above expectations. The report for the week ending March 29 came in at 1.133 MMT. That number was well above trade expectations and about 250% higher than last week’s figure. Soybean exports were also about 66% higher than the same time last year.

Where are all those soybeans going? To unknown destination (610,400 MT for the week.) With fewer buyers in China buying U.S. beans over trade concerns, we could see that stamp show up more often.

Up in Winnipeg, canola prices for May added CAD $0.60 to end the day at CAD $529.00. The July contract gained $0.40 to close at $534.20.

September Corn Prices Back Above $4.00

Corn prices saw stronger returns on Thursday thanks to buying across the board. The May corn contract hit $3.895 per bushel after an 8.5-cent pop. The July contract added 8.5 cents to close above $3.98. September corn was back above that psychological level of $4.00 on the day.

The uptick came despite a weaker-than-expected export sales figure for the week. The USDA projected that old crop sales came in at a little more than 898,000 MT. Though it was about 25% higher than last year’s weekly number, it fell short of last week’s sales by 33%. We SAW South Korea and Japan lock in sales just shy of 200,000 MT each.

Recall that the European Union had threatened to slap the U.S. with tariffs on imports over steel and aluminum tariffs should they not receive an exemption. Even though the U.S. isn’t a powerful source of origination for EU demand, the latter’s imports increased by 51% year-over-year. Through April 3, the EU has imported 13.2 MMT of corn for the 2017/18 calendar. That’s a strong uptick; however, U.S. corn shipments declined by about 27% through March YoY.

Wheat Prices Rally on Dry Weather

Once again, dry weather across the U.S. Plains has markets expecting the worst for a crop that is rated in its worst condition in 16 years.

Today, May SRW prices in Chicago gained 9 cents to close just below $4.65 per bushel.

In Kansas City, the HRW price for May added 12.5 cents to close just under $4.985. The July HRW price added 12.5 cents to close at $5.165 per bushel.

Spring wheat prices in Minneapolis added 13 cents to the May contract, which closed just under $5.90 per bushel.

The USDA released weak sales number this morning for the week ending March 29. The agency said that the U.S sold about 109,000 MMT for the week. That was off 69% from the previous week and off about 81% from the same period last year. Japan was the largest buyer at around 125,000 MT.

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About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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