CNS Canada — The $9 a bushel mark seems like a distant memory for soybeans as import tariffs between China and the U.S. continue to sap buying interest in the crop.
China buys roughly 60 per cent of the United States’ annual soy exports — and there’s no telling when or how that shortfall will be made up.
“You would think there’s more downside than upside,” said Scott Capinegro of Barrington Commodity Brokers in Chicago.
Back on May 29, the dominant July contract was as high as $10.49 a bushel. However, by Wednesday’s opening bell it was at $8.68 (all figures US$).
However, while the picture is a bearish one to be sure, Capinegro feels there is some upside to the news that China will cut tariffs on soybean imports from India, South Korea, Bangladesh, Laos and Sri Lanka.
China said Tuesday it would eliminate those tariffs from July 1. The cuts were made possible under the terms of the Asia-Pacific Trade Agreement (APTA), to which all six countries are parties.
“Some of those countries can sure come here, buy the soybeans and re-sell them to China,” Capinegro said, pegging support for soybeans at $8.50 per bushel.
The corn market has also felt the sting of global market uncertainty, with the July contract falling from a high of $4.10 on May 29 down to Wednesday’s opening price of $3.52.
As for the key December contract, Capinegro said the market is far from its ideal point.
“We’re a long way from $4 (per bushel),” he noted. “I would like to see some solid news so December corn can get back up to the $3.87-$3.91 area.”
The U.S. Department of Agriculture is scheduled to release its acreage report Friday. Most analysts expect the agency to peg U.S. corn plantings at around 88.5 million acres, more than 1.5 million acres below last year’s total.
Other factors in play include the fate of the North American Free Trade Agreement, labour issues in South America, triple-digit temperatures on the U.S. Plains and excess moisture in parts of northern Illinois and Iowa.
“The U.S. government is also saying it will help the farmer, don’t ask me how,” said Capinegro.
Summer has already been full of such wildcards, he said, which makes future predictions all the more difficult.
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.