Soybean futures settled slightly higher on Thursday as reports suggest China’s state-owned importers are buying US agriculture. The crop’s ascent was capped on reports that upcoming rainy weather could boost the quality of American soybeans and increase production this summer. With prices rebounding this month, could soybean have a strong second half this year?
July soybean futures picked up $0.0225, or 0.26%, to $8.735 per bushel at 18:58 GMT on Thursday on the Chicago Board of Trade (CBoT). Soybean prices are on track for a weekly gain of nearly 1%, paring their year-to-date losses to below 9%.
The US agricultural product has trended upward on reports that China is continuing to buy from American farmers and beginning to adhere to the provisions inside the phase-one trade agreement. It was reported that Chinese state-owned companies have been purchasing large volumes of US soybeans for the last quarter of 2020, much to the chagrin of Brazilian exporters.
Despite earlier reports that Beijing mandated state-owned firms to stop purchasing from the US, it turns out that it has been the opposite: They are ramping up their acquisitions as crushers turn their focus on American soybeans for September to January shipments. One of the main reasons for this shift is that Brazil is running out of soybeans after it exported 48 million metric tons in the first five months of this year, with 73% of the output being shipped to China.
The national flag of the People’s Republic of China on blue sky.
As a result, the US Department of Agriculture (USDA) estimates that China will substantially increase its orders of US soybeans in the second half of 2020.
Although soybean sales for the 2019-2020 marketing season have been cut in half, there was a steep rebound in the 2020-2021 marketing year. Two countries seem to be leading the charge: China and Mexico.
The USDA also recently stated that it thinks the Midwest will benefit from showers and thunderstorms in the region. The latest weather forecasts suggest there will be heavy amounts of rain from Minnesota to Nebraska, and USDA officials believe this could be a boon for the quality and production of soybeans.
In other agricultural commodities, July corn futures dipped $0.0025, or 0.08%, to $3.30 per pound. July wheat futures shed $0.055, or 1.13%, to $4.8325 a bushel. September coffee futures dropped 0.15 cents, or 0.16%, to 95.50 cents a pound.