Soybeans Fall as U.S.-China Sentiment Curdles

Date : 11/11/2019 @ 9:23PM
Source : Dow Jones News

Soybeans Fall as U.S.-China Sentiment Curdles

By Kirk Maltais

 

-- Soybeans for January delivery fell 1.5% to $9.17 a bushel at the Chicago Board of Trade on Monday in reaction to President Trump over the weekend saying no agreement had been made regarding the two sides dropping tariffs.

-- Corn for December delivery dropped 1.1% to $3.73 1/4 a bushel.

-- Wheat for December delivery fell 0.9% to $5.05 3/4 a bushel.

 

HIGHLIGHTS

 

Tariff Tea Leaves: While President Trump said negotiations between the U.S. and China are going "very nicely," reports of an agreement between the two sides to drop tariffs weren't accurate. This pushed commodities prices down across the board Monday, with soybeans being the most sensitive to U.S.-China trade fallout.

 

Brawny Brazil: Traders also continued to react to the results from Friday's WASDE report from the USDA that showed soybean production and yield estimates untouched from the previous month, a surprise for traders looking for cuts to both. In Brazil though, agricultural consultancy AgRural estimates that 58% of Brazilian soybeans have been planted for the 2019-20 growing season, 1% point ahead of last year.

The strong showing could mean that Brazil will be capable of filling China's soybean needs, bad news for U.S. growers who need China to buy their beans.

 

INSIGHT

 

Weighing WASDE: Friday's monthly WASDE report from the USDA appears to have given grain traders the answers they were looking for regarding corn and soybeans supply: figures provided by the agency in October are more or less accurate.

While final production and yield figures will be released in January, the USDA isn't likely to adjust their figures for 2019-20 production and yields much further, says AgResource. "The USDA's November WASDE has largely put US supply uncertainty to rest," says the firm, adding the USDA could possibly move corn production estimates down in December.

 

Lender of Last Resort: High-interest loans from third-party lenders -- companies that don't have to follow the same rules as banks -- are helping some farmers that have hit lean times for crop prices, but dragging others already underwater in the current market even lower.

"As a first-generation farmer, capital is hard to come by," said Indiana soybean farmer Raymond Modglin, who said he was unable to borrow from the banks in his area and entered into an agreement for a $400,000 credit facility with a third-party lender, one that ultimately led to his declaring bankruptcy after the lender quickly foreclosed on him. The impact of farmers such as Mr. Modglin being unable to farm may hit grain production in the 2020-21 planting season.

 

AHEAD:

 

-- The USDA is scheduled to release weekly grain export inspections data at 11 a.m. EST Tuesday, delayed from regular Monday release because of the Veterans Day holiday.

-- The USDA is scheduled to provide its weekly update on U.S. crop progress at 4 p.m. EST Tuesday.

-- The EIA is scheduled to release its weekly update on ethanol production and inventories at 10:30 a.m. EDT Thursday.

 

Write to Kirk Maltais at kirk.maltais@wsj.com

 

(END) Dow Jones Newswires

November 11, 2019 16:08 ET (21:08 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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