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CBoT Soybean Hits 1 Months Low On China Virus Fear

25 Jan 2020 7:53 am
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Mumbai (Commodities Control) – U.S. soybean futures sank to their lowest level in more than six-weeks on Friday as fears over the coronavirus spreading from China triggered broad-based selling.

The virus is expected to dent growth in China, the world's top importer of soybeans, after months of economic worries over trade tensions with the United States. Equities and other commodities including oil and copper fell as investors moved into safe-haven assets.

"It's risk-off everywhere," said Ted Seifried, chief ag market strategist for Zaner Group in Chicago.

The most actively traded Chicago Board of Trade soybean contract dropped 7 ½ cents to settle at $9.02 a bushel and reached its lowest price since Dec. 12. May 20 Soybeans closed at $9.15 3/4, down 7 1/2 cents. July 20 Soybeans ended at $9.29 1/2, down 7 1/2 cents and Aug 20 Soybeans closed at $9.34 1/4, down 7 1/2 cents.

While Mar 20 Soybean Meal closed at $298.30, down $0.60 and Mar 20 Soybean Oil closed at $32.02, down $0.46.

Traders and farmers continued to wait for signs of increased Chinese buying of U.S. farm goods after Beijing pledged to significantly increase imports in an initial trade deal the countries signed last week. The agreement is meant to reduce tensions after nearly two years of a tit-for-tat tariff war.

"The stigma on soybeans of China not buying is a problem," Seifried said.

Soybeans are the biggest U.S. crop export to China and the oilseed market has been particularly sensitive to developments in the trade dispute.

Brazil is expected to harvest a massive crop, providing stiff competition for sales to China.

"There has been bearish supply news out of South America via a monster Brazilian crop, but I think the majority of the selling of late is coming from this coronavirus story," said John Payne, senior futures and options broker for Daniels Trading in Chicago.

USDA reported weekly soybean export sales of 790,006 MT. That was a Week-on- Week increase of 23% but was 25.9% lower than the same week last year. New crop soybean bookings for the week ending 16th January were in line with analyst expectations at 120,743 MT. Total unshipped commits are 6.977 MMT.

As for soybean meal, the update showed more than expected sales for the week ending 16th January, with 641,919 MT in bookings. That was a weekly increase of 71.1% and was 162.2% more than the same week last year.

Soybean oil sales were also above expectations, listed at 55,588 MT for the same week. That was the highest weekly sales number for bean oil since the week ending 25th January 2018. Soy oil shipments total 322.745 MT through the first 16 weeks of the MY, which is a 3 year high.

The Brazilian Real continues to be very cheap, as well, hurting U.S. export competitiveness. South American weather remains within the recent pattern for soybeans, as well, with early harvest underway.

Basis has remained steady at processors with the strong crush margins and poor weather.

Support and Resistance for active contract lies at $8.95 and $9.12/bushel, respectively.

(Commodities Control Bureau)

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