CBOT soybean market recovers after wild week

WINNIPEG (CNS Canada) – After a wild week where the Chicago Board of Trade (CBOT) soybean market plunged following China announcing tariffs on imports of United States soybeans, it has recovered.

On April 5, China announced a 25 per cent tariff on U.S. soybean imports in retaliation of previously announced tariffs by the U.S. on US$50 billion worth Chinese goods. The CBOT soybean market quickly took notice, dropping in price significantly. Basis levels in Brazil rose as buyers abandoned the U.S., with one trader saying Brazilian soybean prices were a dollar higher than in the U.S.

“All of the sudden (we’ve had) a lot of business. A lot of it apparently from Europe, Mexico here today and then the last couple of days even Argentina has been coming and buying U.S. soybeans just because they’re so much cheaper than the Brazilians,” said Jack Scoville of Price Futures Group in Chicago.

On April 10, the United States Department of Agriculture (USDA) released its monthly supply, demand report. The report was for the most part neutral; soybeans received a bit of support after the USDA lowered its global soybean ending stocks forecast to 90.8 million tonnes, from 94.4 million tonnes in March.

CBOT corn contracts were weaker due to the USDA not increasing its ending stock estimates. World stocks were instead lowered to 197.8 million tonnes from 199.2 million tonnes in March. Corn wasn’t affected as much by the Chinese tariff threats as the U.S. sells little corn to China.

According to Scoville, both the May corn and soybean contracts have regained ground and are hitting close to recent highs. The May corn contract is over US$3.90 per bushel, striking close to a previous high of US$3.95 per bushel. The May corn contract is also up, on April 10 it was sitting at the US$10.60 to US$10.64 per bushel range, about 18 cents off its previous high.

“I think there’s been some U.S. selling in the soybeans as well from U.S. producers. Corn I know there’s been some selling, producers trying to take advantage of these somewhat better prices and that’s kind of put a lid on the market,” Scoville said.

Overall Scoville thinks the market is getting closer to highs than to lows. He thinks the corn contract could go over US$4 per bushel while the soybean contract could have a chance to go back over the recent highs of US$10.80 per bushel.

“That would probably be driven by the strong demand that we’ve seen develop ever since these tariff announcements came out,” Scoville said.

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