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276069

As Trade Goes, So Go Soybean Prices, Analyst Says

China claims a drop in 2018/19 soybean imports.

Soybeans ended the week on a dull note because of lack of fresh news to trade. 

Hangover from Wednesday’s bearish ending stock projection of a record 845 million bushels kept a lid on prices.

News that Trump wants to press ahead with the next round of tariffs on China totaling $200 billion put pressure on the market at midsession. It looks like he is going to go ahead with the tariffs to up the pressure on China, despite the U.S. offer to meet and restart trade negotiations.

How these trade negations go will have a big impact on U.S. prices. On this week’s WASDE report, the USDA lowered its new-crop China import estimate from 95.0 to 94.0 million tonnes. That is now unchanged with the old crop.

The Chinese government has claimed its imports will decline to 83.7 this year. If the Chinese are successful in cutting imports by 10 mmt, we would anticipate the lost demand would come off the U.S. balance sheet, and the ending stocks number will easily swell over 1 billion bushels and be very bearish to bean prices.

Odds are this record crop will be getting bigger as well. Of the 10 years with higher yields in September, in eight of those years higher yields were posted yet again by the final. With both the U.S. and China taking a hard line in negotiations with each other and the crop looking like it is getting bigger as harvest kicks into full speed, we would argue that rallies will be hard to maintain as we move forward near term.

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