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US weather makes for a volatile soybean market

CBOT (Chicago Board of Trade) soya beans remain volatile, reacting to changes in the US weather, with overall conditions starting to look drier as we head into July, and temperatures starting to rise.

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Commenting in ADM Agriculture’s latest market report on the OSR market, Barry Howard, head of oilseeds, said: “As mentioned in previous reports, planting in the Western Corn Belt is complete. The Eastern Corn Belt remains wet, which is slowing progress. There are roughly 12.7M acres of soya beans left to plant compared with planting intentions in March. Plant-prevent insurance deadlines have now passed in most states.”


The grain trader said that Chinese soya bean demand going forward remains questionable as Asian Swine Flu continues to make the news. It was reported that 3.7M pigs have been culled, with most cases in China and Vietnam, meaning reduced demand for soya beans as animal feed.


The latest ADM report was issued prior to news that US President Donald Trump and China’s Xi Jinping have apparently struck a deal on the sidelines of the G20 summit, whereby US tech firms will be allowed to sell components to telecoms company Huawei, in exchange for China buying large volumes of US agricultural goods. This would no doubt include US soya beans, which have been hit hard by the US-China trade war, but, of course, it is yet to be seen how that agreement will pan out in reality.


“In Canada, some canola crops missed the recent rains and will require moisture in the next few weeks,” continued Howard. “Yesterday, Statistics Canada estimated 20.95M acres had been sown, down 400,000 acres from April’s estimate. This is the lowest area since 2016, down 8% from last year, although other members of the trade still estimate a reduction of 10%-12%.


“In Australia, farmer selling remains slow. There are showers in the forecast over the weekend, which should help improve soil moistures and plant conditions.


“In Europe, we continue to see growers sell their old crop balances as they prepare for the impending harvest. Combining has just started in Ukraine, with yields as expected. EU crop estimates still vary but are below 18 Mt.


“Although MATIF rapeseed futures have followed other markets lower over the last few days, a weaker pound has helped support UK domestic prices,” Barry concluded.


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