Soybean commentary

Soybean commentary: Futures rebound amid trade talks silver lining

13 Aug 2019

Futures rebounded on Tuesday as the US government unexpectedly announced that it planned to delay by several months some of the proposed new tariffs it had planned to levy on $300 billion of Chinese imports, while excluding some tariffs altogether.

The announcement from the office of the United States Trade Representative came after an official announcement from China's commerce ministry that Vice Premier Liu He held a phone conversation with US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin in which “solemn negotiations” by China were made with the intention of alleviating new US tariffs.

September futures opened at $8.70/bu, 4 c/bu above Monday’s close, dropped to a low of $8.63/bu before rebounding to a high of $8.83/bu.

By 1800 London time, the contract was changing hands at $8.77/bu.

Ahead of the surprise announcement – whereby some US tariffs on Chinese products would still go ahead as planned on September 1 – the shock caused by yesterday’s Wasde resurvey of corn acres had largely subsided.

The hiatus allowed market participants to take stock of the bullish signals heralded by the soybean report around lower US harvested acres, production and ending stocks for 2019/20.

In the cash markets, demand for US beans remained low although there were rumours that China was making enquiries for beans out of the PNW, in a move that could not be confirmed by time of publication.

In the US Gulf, offers held at 55 c/bu over September futures for September loading against no clear bids.

Barge bids meanwhile held firm at 38 c/bu over September futures with the barge bid-cargo offer spread holding at 17 c/bu.

Further south, the sharp drop in the value of the peso spurred on more farmer selling with a reported 250,000 mt of beans sold in Argentina's domestic market overnight.

Export offers were reported at 87 c/bu over September futures against bids at 72 c/bu for September futures following a trade last night reportedly concluded at 74 c/bu for September.

In Brazil, a trade in the paper Paranagua market was concluded at 132 c/bu before the market unexpectedly fell on reports some sellers were lowering offers in light of the rising Board.

The lowest offers were reported at 125 c/bu against bids at 115 c/bu for September loading.

Earlier in the day, the APM-6 China CFR premium was assessed 1 c/bu lower at 228 c/bu over September futures, equating to $402/mt, down $5/mt from previous assessment.

Since then, offers for loading from mid-September to mid-October were reported at 225 c/bu over November futures.