Soybeans Settle Higher Despite Oversupply Concerns

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Soybean futures are settling slightly higher to start the holiday-shortened trading week, though it was a sideways session. Oversupply concerns are hanging over the agricultural commodities market. US farmers are planning to grow more soybean, Chinese imports may witness diminished imports, and Brazil exports spiked in March. Soybean prices might be setting up for a down week.

May soybean futures edged up $0.015, or 0.18%, to $8.5575 a bushel at 18:43 GMT on Monday on the Chicago Board of Trade (CBoT). Soybean prices fell about 3% last week, adding to their year-to-date decline of more than 10%.

Allendale, an agricultural market strategies and analysis firm, says US farmers plan to plant more soybeans and corn and less wheat this year. According to its survey of American growers in early March, producers are expected to plant 83.74 million acres of soybeans, up 7.64 million acres from a year ago. They intend to plant 94.63 million acres of corn, up 4.9 million acres from 209. Wheat is anticipated to tumble to 44.47 million acres, a 693,000 drop from last year.

Weather conditions are damp in the key growing areas, with much of these favorable conditions predicted to occur in April, May, and June.

But while American farmers expect to raise their output levels, Brazil is continuing to ship soybeans at huge levels. Brazil’s foreign trade department confirmed that it exported 11.6 million tons of soybeans last month, a 38% increase from the same time in 2019. The US Department of Agriculture (USDA) forecasts that Brazil’s export total will hit 77 million tons in the 2019-2020 marketing year, a 3% jump from the previous year.

Brazil’s biggest market was China, accounting for more than 40% of the exports. However, a new report suggests that Beijing may witness lower arrival of soybean shipments this month. Beijing-based Cofeed told S&P Global Platts that logistical issues in South America could lead China to receive just 6.9 million metric tons of soybeans, down from 7.6 million mt from April 2019.

This is something that Brazil could afford – for now. Argentina’s farmers are growing fewer amounts of soybeans and exporting even less. Producers are slashing output and curtailing operations due to the coronavirus-induced lockdown, higher export tariffs, and higher municipal taxes and fees. Other countries, like Russia and Ukraine, are also hinting that they plan to reduce grain exports during the COVID-19 pandemic.

In other agricultural markets, May corn futures shed $0.03, or 0.91%, to $3.2775 per pound. May wheat futures tacked on $0.0625, or 1.14%, to $5.555 a bushel. May coffee futures rose 0.0015, or 0.13%, to $1.168 per pound.

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