China Demand Outlook Dampens Soybean Futures

March 12, 2014: It has all been downhill for soybean futures following Monday’s USDA Crop Production report – soybeans down for a third day. Soybean futures have had a spectacular run higher since early February, but the world’s biggest buyer of soybeans – China – is being perceived as turning cold to paying a premium.

 

China has already imported nearly 5M metric tons of soybeans last month (which is nearly 2M tons more than the same time last year), but the USDA is reporting they cancelled buying 245,000 tons last week. Are soybean futures retreating with the assumption China is the main buyer of our soybeans…?

Barb Levy, chief director for The Fox Group’s futures division in Chicago, had this to say regarding the current soybean futures situation, “Soybean futures finished lower again in today’s trading session as China is expected to cancel more purchases of U.S. beans in favor of Brazil’s crop.” Levy added, Additional pressure on the soybean futures comes from U.S. growers who have been releasing a large amount of their soybeans in storage to take advantage of the higher grain price.”

Soybeans futures trend remains up despite this three-day set-back. Normally soybean futures do not begin such a rally until late this month/early April, so they may either consolidate or we may be looking at a potentially bigger move to come into early summer.

ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.