February 1, 2024

 

Chicago soybean futures hit two-year low amid supply glut, China demand concerns

 
 


Chicago soybean futures experienced a significant downturn, plunging to a two-year low below US$12 a bushel due to improved supply expectations from South America and growing concerns about demand from China, Nasdaq reported.

 

The most active soybean contract on the Chicago Board of Trade (CBOT) reached US$11.89-1/4, the lowest since November 2021, as economic challenges persist in China, the world's leading importer.

 

Andrew Whitelaw of consultants Episode 3 said that soybeans are under pressure from the prospect of higher supply coming out of Argentina. Demand is also an issue with economic woes persisting in China, the world's number one importer.

 

Soybean prices have been impacted by favourable weather conditions in South America, boosting yields.

 

Last week, the Buenos Aires Grains Exchange increased its soybean and corn crop estimates for Argentina. In Brazil, the 2023/24 soybean harvest reached 11% of the planted area, as reported by consultants AgRural. Simultaneously, concerns arise about weakened demand from China as the country grapples with a shrinking pig herd and a deepening real estate crisis.

 

Speculators have adopted their most bearish January stance across US grains and oilseeds, with funds being net sellers of soybeans, corn, and wheat futures.

 

In related crops, CBOT corn dipped 0.5% to US$4.38 a bushel, nearing its three-year low. Wheat fell 0.4% to US$5.91-1/4 a bushel, not far from its three-year low of US$5.40 from last September. Russian wheat export prices continued to decline due to oversupply pressure in the Black Sea.

 

The European Commission raised its forecast for EU stocks of soft wheat, citing upward revisions to harvest production and imports. Meanwhile, a cold snap in central and northern India could contribute to a bumper wheat crop, with the government projecting a record harvest of 114 million tonnes. The US Department of Agriculture reported export inspections of US wheat in the latest week at 264,666 tonnes, falling below trade expectations.

 

-        Nasdaq

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