Soybean futures are continuing to retreat on Tuesday, adding to their 4.3% slump over the last week. After a meteoric ascent that sent prices to a 52-week high of $16.67, the crop has headed back down to earth and could slide below the critical $15 mark. Is this the end of the bull market in soybeans, or is this a short-term correction?
July soybean futures tumbled $0.1675, or 1.1%, to $15.06 per bushel at 17:36 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices have dropped nearly 1% in the month of May, paring their year-to-date gain to around 15%.
One of the biggest factors in the soybean market has been institutional selling. In recent weeks, institutional investment funds have been selling soybean contracts, as well as wheat and corn. With prices trending at their highest levels in a decade, traders are liquidating their holdings and taking advantage of the profits.
Financial analysts are also worried about margin calls in the commodities market, including agriculture and energy.
But crops are capping their losses thanks to China continuing to purchase enormous volumes. At the same time, there are worries that China could limit commodity prices after the National Development and Reform Commission (NDRC) released a plan to bolster commodity price controls as part of the government’s five-year plan. This would target iron ore, copper, cotton, corn, natural gas, and soybeans.
“(Local governments) should study and judge the import impact in depth, promptly make suggestions… (on matters) such as reserves, import and export, fiscal and taxation, and financial adjustment measures,” the NRDC said in a statement. “For high-energy intensity and high-emission industries, (China) will implement differential and tiered electricity prices… to promote carbon reduction.”
For now, it is unclear as to how much of an effect this could have on the broader commodities market. That said, food security worries have been rampant, particularly as Beijing purchases volumes of limited inventories from the hard commodities market.
In other agricultural markets, July corn futures plummeted $0.40, or 6.09%, to $6.1725 per bushel. July wheat futures shed $0.10, or 1.51%, to $6.52525 per bushel. July coffee futures shed $0.0035, or 0.23%, to $1.5015 a pound.

