Chicago Board of Trade witnessed a slip in soybean futures on Tuesday, reversing gains from the previous session as the market grappled with the weight of ample supplies from South America. Corn and wheat futures also experienced declines in response to the prevailing market conditions.
Traders are eagerly anticipating the U.S. Department of Agriculture’s upcoming monthly supply and demand report on Friday, which will provide crucial insights into the current estimates regarding corn and soy production in South America. Both corn and soy prices are currently hovering near three-year lows, reflecting the subdued market sentiment.
Chief strategist at brokerage Allendale, Rich Nelson, noted, “We’re currently experiencing a period of stagnation.” The most-active soybean contract fell by 6 cents to close at $11.49 per bushel, while wheat prices ended down by 13 cents at $5.51 per bushel after hitting a contract low. Corn prices dropped by 3-3/4 cents to $4.26-1/4 per bushel.
The decline in CBOT wheat was influenced by tough competition from inexpensive Black Sea exports and a 3-1/2 year low in European wheat futures, as highlighted by Terry Reilly, senior agricultural strategist for Marex.
Despite adverse weather conditions leading to analysts revising down Brazilian crop forecasts, South America is still expected to yield plentiful soybean harvests. Analysts anticipate the USDA to lower its estimate for Brazil’s harvest to 152.28 million metric tons, as indicated by a Reuters poll.
The surplus of South American supplies is projected to bolster global stocks this season, dampening hopes for a significant price recovery, according to Commerzbank. Meanwhile, China, the world’s largest soybean importer, has increased its budget for stockpiling grains and edible oils this year, along with implementing supportive policies to enhance soybean and grains production.
While China imported 65,000 metric tons of animal feed corn from Ukraine recently, U.S. farmers are holding substantial quantities of corn from the previous year’s harvest. Additionally, commodity funds have amassed significant short positions, contrasting with farmers who are contemplating their selling strategies amidst the market uncertainties.
Analyst Tomm Pfitzenmaier from Summit Commodity Brokerage remarked on the ongoing dynamic, stating, “There’s a tug of war between funds holding heavy short positions and farmers holding long positions, pondering their selling decisions.”