Uncertainty of U.S. trade policy leads to sharp weekly fall of soybeans
Chicago Board of Trade (CBOT) agricultural commodities closed sharply lower in the past trading week ending June 8, with soybean prices plunging more than five percent amid uncertainty of U.S. trade policy toward top buyer China.
Every single session of the week saw the fall of soybean prices, pointing to the deep concern among traders and farmers over the unsolved trade issues between the United States and China.
The most active contract for July soybeans were down 52 cents weekly, or 5.09 percent, to 969.25 dollars per bushel. July corn delivery fell 13.75 cents, or 3.51 percent weekly, to 3.7775 dollars per bushel. July wheat delivery was down 3.25 cents, or 0.62 percent, to 5.20 dollars per bushel.
The downturn of soybean futures was a result of weak demand from China, as well as pro-crop weather conditions in the U.S. Midwest, said market observers.
China, the top buyer of U.S. soybeans, has been active in booking Brazilian soybeans for July and August, and analysts said this was not only a seasonal practice.
Soybean sales in the seven days ending May 31 decreased 40 percent from the previous week, the U.S. Department of Agriculture (USDA) said in a report. China, which used to be the biggest importer on a weekly basis, has been absent for quite a long time on the U.S. list of soybean export sales.
Trade relations between the two economic giants have been rocky in recent months and Chinese officials are actively engaged in tense negotiations with their American counterparts, trying to defuse a potential trade war.
Grant Kimberley, a farmer and promoter for Iowa soybeans, said they are against any trade war and want to sell more soybeans to China and other countries.
“We should be part of the solution, which is bringing down the trade imbalance,” he added.
CBOT wheat first posted significant gains amid unfavorable weather in some key wheat growing regions, as dryness continued in parts of Australia, China’s north plains and some Black Sea areas, posing threat to the wheat production there.
During the last session this week, the prices of wheat retreated sharply over profit-taking, which resulted in a moderate weekly decline.
CBOT corn also suffered big losses in the past week, due to export decline and pro-crop weather conditions.
According to USDA data, old-crop corn sales to overseas buyers totaled 838,600 metric tons, down 16 percent from the previous week and down 5 percent from the prior four-week average.
Meanwhile, the U.S. ethanol production, using corn as raw material, was unchanged while stockpiles rose slightly week to week, according to the Energy Information Administration.