Soybean futures are sliding on Tuesday as global demand shows signs of waning. It has been a roller coaster ride for soybean prices since hitting a peak of $16.67 this past spring. The agricultural commodity has been trying reignite the rally from the first half, but the fundamentals suggest that the bull run may be on the decline.
September soybean futures tumbled $0.19, or 1.4%, to $13.345 per bushel at 13:52 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices are coming off a weekly loss of about 2%, adding to their July drop of roughly 4%. Year-to-date, soybean is up only 1.85%.
Brazil, the world’s top soybean producer, saw its soybean exports slump in July as farmers hoarded more stocks, raising soybean concerns. According to a report from the Secretariat of Foreign Trade, or Secex, Rio de Janeiro exported 8.66 million metric tons of soybeans in July, down from 11.12 million metric tons in June. This is also down from 9.95 million metric tons from the same time a year ago.
Moreover, daily export shipments averaged 40,000 metric tons lower at just below 394,000 metric tons. In the January-to-July period, soybean shipments were forecast to come in at 66 million metric tons, down 3% in 2021.
But the biggest story might be the decrease in soybean exports to China, the world’s largest soybean importer. Year-to-date, Beijing’s soybean imports have declined 5%, driven by crushers have slowed down operations as they wit for margins to improve before going on a buying spree.
Weather conditions have also impacted Brazil, with the South American country going through its third strong cold front this year. It is expected that the unusual cold weather would affect crops and potentially damage trees.
Meanwhile, according to the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS), Indonesian soybean production is forecast to slump in the 2021-2022 marketing season. Analysts estimate that the country’s soybean output could fall to 425,000 tons, down from 475,000 in the previous year. Domestic consumption is anticipate to increase 52,000 tons to 3.2 million tons in the upcoming marketing year due to soaring tempeh and tofu production.
But if consumption is increasing and output could potentially subside, could soybean be setting up for a renewed bull run later in the year?
In other agricultural commodities, September corn futures dipped $0.0125, or 0.22%, to $5.605 a bushel. September wheat futures shed $0.0375, or 0.51%, to $7.2575 a bushel. September coffee futures rose $0.025, or 1.45%, to $1.753 per bushel.