Overview of the Current Situation
Soybean futures in Chicago experienced their second consecutive drop on Tuesday, as international trade tensions and a decline in soybean oil futures weighed on prices, according to analysts.
Market Performance
- Soybeans: The most active soybean futures on the Chicago Board of Trade (CBOT) fell by 8.25 cents, reaching $10.3725 per bushel.
- Corn: Corn futures traded mixed, with consistent planting progress in the United States and an upcoming harvest in Brazil adding pressure. Corn futures for the most active contract dropped by 0.5 cents, trading at $4.53 per bushel.
- Wheat: Wheat prices rose due to technical trading operations, with CBOT wheat increasing by 5 cents to $5.3625 per bushel.
Impact of Trade Tensions
China’s demand for US soybeans has dwindled amid the ongoing trade war between Washington and Beijing, which was previously the largest buyer.
Market participants are awaiting clearer signs that Washington and Beijing might engage in negotiations to resolve their tariff dispute.
“The White House says they’re working on all these deals, but we’re not seeing any announcements, and the market is getting tired.”
Soybean Oil Futures’ Decline
Soybean oil futures have taken a beating due to the lack of biofuel blending mandates from the Environmental Protection Agency (EPA) and budget cuts, leading to long position liquidations and weighing on the entire soybean complex, according to traders.
The weekly update from the US Department of Agriculture (USDA) showed that corn planting progress reached 40%, slightly above the five-year average of 39% but below analysts’ expectations of 41%.
Soybean planting progress stood at 30%, just below the forecast of 31%.
Key Questions and Answers
- What is causing the decline in soybean futures? International trade tensions and a decrease in soybean oil futures are weighing on prices.
- How has China’s demand for US soybeans been affected? China’s demand has significantly decreased due to the ongoing trade war between Washington and Beijing.
- What factors are influencing soybean oil futures’ decline? The absence of biofuel blending mandates from the EPA and budget cuts have led to long position liquidations, impacting the entire soybean complex.
- What does the USDA’s weekly update reveal about crop progress? Corn planting progress is at 40%, slightly above the five-year average but below analysts’ expectations. Soybean planting progress stands at 30%, just below forecasts.
