Soybean Prices Drop Double-Digits Friday

DES MOINES, Iowa -- Soybeans plunged double digits on Friday after the U.S. Department of Agriculture lowered its outlook for exports and on fears of the ongoing trade spat between the U.S. and China. 

The USDA on Thursday lowered its forecast for export sales in the 2018-2019 marketing year that starts on Sept. 1 by 250 million bushels to 2.04 billion. Consequently, it raised its outlook for ending stockpiles in the marketing year to 580 million bushels from a prior forecast for 385 million. 

The US last Friday enacted tariffs on $34 billion worth of US goods, and China retaliated by putting duties on an equal amount of U.S. goods, including soybeans. Trade tensions escalated midweek when the Trump Administration proposed levies on another $200 billion worth of Chinese goods. China didn't immediately respond, which was seen as a positive for trade.  

S&P Global Platts senior director of agricultural commodities analytics, said the price ratio between old-crop soybeans and old-crop corn should remain under attack for the foreseeable future.

"This is based in no small part on the apparent Chinese willingness to draw down their soybean ending stocks, at a time when U.S. farmers have planted record acreage in beans with cooperating weather for many,” Meyer said. "Strong FOB prices in Brazil, given the Chinese counter-tariffs, would certainly suggest an acreage increase for Brazil in the fall with a 120 million metric ton crop well within the realm of possibilities. These factors combined, along with strong demand for U.S. corn, will keep the pressure on the price ratio."

Soybean futures for December delivery fell 14 3/4¢ to $8.34 1/2 a bushel on the Chicago Board of Trade. Soymeal dropped $4.80 to $322.90 a short ton, and soy oil lost 0.36¢ to 28.33¢ a pound. 

Corn futures fell 5 1/2¢ to $3.53 3/4 a bushel in Chicago. 

Wheat futures, however, rose double digits on Friday. Chicago futures gained 12 1/2¢ to $4.97 a bushel while Kansas City wheat added 10 1/4¢ to $4.91 1/2 a bushel. 

In the outside markets, the NYMEX crude oil market rose 0.5% and Brent futures, the global benchmark, added 0.7%. The U.S. dollar fell 0.1% and Dow Jones Industrials gained 0.4%. 

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DES MOINES, Iowa -- On Friday, the CME Group’s farm markets are moving mostly lower, with soybeans leading the way.

At midsession, the September corn futures are 3¼¢ lower at $3.42½. December futures are 3½¢ lower at $3.55¾.

August soybean futures are 13½¢ lower at $8.20. November soybean futures are 13¾¢ lower at $8.35½.

September wheat futures are 10½¢ higher at $4.95.

August soy meal futures are $3.90 per short ton lower at $327.00. August soy oil futures are 0.31¢ lower at 27.96.

In the outside markets, the NYMEX crude oil market is $0.61 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 86 points higher.

Al Kluis, Kluis Advisors, says that it’s been a tough week for the soybean market.

“The soybean market trend is still lower for new-crop soybean futures. However, the action yesterday – a key reversal higher – could be bringing the downtrend to an end. We put in a new low (trading the lowest levels in 10 years), but we managed to close higher,” Kluis stated to customers in a daily note.

He added, “If $8.38 per bushel proves to be our low, then the first area of major resistance would be $9.23, which is a 38% retracement up. But first, we need to get a close above $8.67 to confirm that low.”

To end the week, investors will be watching today’s Commitments of Traders Report to be released this afternoon at 2:30 CT.

“Will the funds push their combined net short positions in corn and soybeans to more than 200,000 contracts?” Kluis asked in his daily note.

Peter J. Meyer, S&P Global Platts senior director agricultural commodities analytics, says that the price ratio between old-crop soybeans and old-crop corn should remain under attack for the foreseeable future.

“This is based in no small part on the apparent Chinese willingness to draw down their soybean ending stocks, at a time when U.S. farmers have planted record acreage in beans with cooperating weather for many,” Meyer says. 

He adds, “Strong FOB prices in Brazil, given the Chinese counter-tariffs, would certainly suggest an acreage increase for Brazil in the fall with a 120M MT crop well within the realm of possibilities. These factors combined, along with strong demand for U.S. corn, will keep the pressure on the price ratio."

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s soybean market closed off double digits, as corn and wheat follow.

At close, September corn futures finished 7¾¢ lower at $3.40; December futures ended 7½¢ lower at $3.53¼.

August soybean futures settled 22¾¢ lower at $8.33; November soybean futures finished 23½¢ lower at $8.48¼.

September wheat futures closed 20¼¢ lower at $4.71¾.

August soy meal futures finished $1.70 per short ton lower at $330.50. August soy oil futures finished 0.56¢ lower at 28.43¢.

In the outside markets, the NYMEX crude oil market is $3.42 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 194 points lower.

Alan Brugler, president Brugler Marketing & Management LLC, says tariff damage is hitting the markets.

“We are building the proposed and actual tariffs into the U.S. price structure and also seeing a normal decline after heavy farmer selling in the cash market back in April and early May,” Brugler says.

Al Kluis, Kluis Advisors, says the soybean market is reeling from trade news pressure.

“It is worth noting that soybeans have nearly retraced the entire rally from last Friday. The outside markets – as well as commodities this morning – were rattled by the announcement of a new $200 billion list of Chinese goods that will be subject to U.S. duties starting mid- to late August,” Kluis stated in a daily note to customers.

Kluis adds that until we get the trade war settled and behind us, traders will be reluctant to build a long position.

“When good news about the trade war hits the newswires, the momentum traders will be quick to reverse their shorts and look to build a long position,” Kluis stated in a newsletter Wednesday.

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets face pressure from favorable crop condition ratings and favorable crop weather.

At the close, September corn futures finished 6¼¢ lower at $3.47¾, after hitting a contract low of $3.44¼. December futures finished 6¼¢ lower at $3.60¼.

August soybean futures finished even at $8.55¾; November soybean futures closed ½¢ lower at $8.71½.

September wheat futures closed 16¢ lower at $4.92.

August soy meal futures ended $2.30 per short ton higher at $332.20. August soy oil futures finished 0.13¢ higher at 28.99¢.

In the outside markets, the NYMEX crude oil market is 22¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 130 points higher.

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets give back half of Friday’s sharp soybean gains.

At the close, September corn futures finished 6¼¢ lower at $3.54; December futures closed 6¢ lower at $3.67.

August soybean futures ended 21¾¢ lower at $8.55¾; November soybean futures finished 22½¢ lower at $8.72.

September wheat futures closed 7¼¢ lower at $5.08.

August soy meal futures settled $8.20 per short ton lower at $329.90. August soy oil futures finished 0.16¢ lower at 28.86¢.

In the outside markets, the NYMEX crude oil market is 13¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 321 points higher.

Mike North, president at Commodity Risk Management Group, says the market pressure is coming from many directions.

“It’s a combination of ongoing things such as trade concerns, a more moderate eight- to 15-day forecast, and the thoughts of a growing balance sheet in this Thursday’s WASDE that are unwinding last Friday’s gains.”