Background on Soybean Market and Key Players
Soybean futures on the Chicago Board of Trade (CBOT) plummeted to their lowest levels in seven weeks on Monday, as traders unloaded risk amid concerns over the pace of U.S. exports and expectations of a massive harvest in Brazil, according to market operators.
Key Commodities Affected
- Soybeans: The most active soybean contract on the CBOT dropped by 0.56% to $10.7075 per bushel.
- Wheat: Futures fell due to Argentina’s large harvest maintaining global supply abundance.
- Corn: Corn futures were pressured by cheap Argentine forage wheat, which could reduce corn demand.
Reasons for the Decline
Several factors contributed to the decline in soybean prices:
- Disappointing Chinese Purchases: Post the U.S.-China trade truce, Chinese soybean purchases fell short of expectations, failing to reach the announced 12 million tons.
- Drag from Futures Positions: The Commodity Futures Trading Commission (CFTC) reported on Friday that commodity funds had built up a massive net long position in CBOT November soybean futures, making the market susceptible to long position liquidation episodes.
Expert Opinion
Chuck Shelby, president of Risk Management Commodities, commented on the market’s vulnerability to position liquidation due to the substantial net long positions held by commodity funds.
