Soybean futures are rebounding in the middle of the trading week, buoyed by growing supply concerns across the global commodities market. Soybean has been one of the top-performing commodities this year, rallying more than 25%. But can it sustain this momentum?
May soybean futures rose $0.11, or 0.66%, to $16.8275 per bushel at 12:46 GMT on Wednesday on the Chicago Board of Trade (CBoT). The crop has eased over the last week, sliding about 2%. On the month, it is up roughly 1%.
International soybean inventories could be depleted and challenging to replenish because it is getting expensive to export soybeans, including from the world’s primary supplier: Soybeans.
It was recently reported companies and exporters are finding it difficult to ship their products because of soaring diesel costs, expensive freight rates, and deteriorating road conditions in the South American country.
This has become a tremendous concern because food inflation is soaring and soybean stocks are already lower in major importing countries. When you factor in a strengthening Brazilian real, it becomes even more expensive to buy soybeans from Rio de Janeiro.
Underlying issues in the broader soybean market were further exacerbated on reports that Indonesia is banning exports of pam oil, the competing vegetable oil.
“The new news is the Indonesian halt, but it’s a continuation of what has been going on for some time here. Global vegoil supplies are not keeping up with the demand,” Terry Linn, analyst with Linn & Associates in Chicago, told Reuters.
This has been the common theme in recent years, with many countries limiting their exports to ensure there is enough food at home and prices do not spiral out of control.
In other industry news, the US Department of Agriculture (USDA) confirmed that private exporters sold 132,000 tons of soybeans to China for delivery in the 2022-2023 marketing season.
The USDA also noted that 27% of US winter wheat was in good-to-excellent condition, while 7% of domestic corn had been planted, below the five-year average of 15%.
“A lower U.S. wheat crop would further exacerbate the supply tightness on the wheat market as Ukraine is likely to grow significantly less wheat this year on account of the war,” Commerzbank said in a note.
In other agricultural markets, May corn futures slipped $0.01, or 0.12%, to $8.0025 per bushel. May wheat futures dropped $0.08, or 0.73%, to $10.87 a bushel. May coffee futures shed $0.0095, or 0.43%, to $2.202 per pound.