US Soybean Futures Retreat as Brazil's Record Harvest Progresses
US soybean futures experienced a notable decline on Monday, marking a pullback from last week's rally that had driven prices to a two-month high above $11 per bushel. The downturn was primarily attributed to profit-taking by traders, coupled with the advancing harvest of a record-large soybean crop in Brazil, which added bearish sentiment to the market.
Market Movements and Price Details
As of 12:15 p.m. CST (1815 GMT), Chicago Board of Trade March soybean futures were down 8-1/4 cents at $11.07 per bushel. This retreat followed Friday's peak of $11.37-3/4, which represented the contract's highest level since early December. In parallel, CBOT March corn futures fell 2-3/4 cents to $4.27-1/2 a bushel, while March wheat futures dropped 2-1/4 cents to $5.27-1/2 a bushel, both drifting lower amid a lack of supportive news.
Factors Behind the Rally and Subsequent Decline
Last week's surge in soybean futures was closely tied to remarks from former US President Donald Trump, who suggested that China might increase its purchases of US soybeans to 20 million metric tons for the current season. This optimism unleashed a wave of cash soybean sales by US farmers, which ultimately helped knock futures off their highs by Friday. However, dealers remain skeptical, as higher prices have made it less economical for China to purchase US beans, casting doubt on the sustainability of such trade prospects.
Analysts note that the focus has shifted back to Brazil, where the harvest is gaining momentum. According to agribusiness consultancy AgRural, growers in Brazil, the world's top soybean supplier, had harvested 16% of the soybean crop as of last Thursday, slightly above the 15% reported a year earlier. Tom Fritz, a partner with Chicago-based EFG Group, commented, "A lot of this has to do with the Brazilian harvest getting into full tilt."Upcoming Reports and Market Expectations
Ahead of the US Department of Agriculture's monthly world supply-demand report on Tuesday, analysts surveyed by Reuters on average expect the agency to raise its estimate of Brazil's soybean harvest to 179.4 million metric tons, up from its previous forecast of 178 million, which was already an all-time high. Additionally, Brazilian crop supply agency Conab is scheduled to release its own production estimates on Thursday, potentially providing further insights into market dynamics.
Traders largely shrugged off news from the USDA on Monday confirming private sales of 264,000 metric tons of US soybeans to China. Sean Hickey, an analyst at Bendigo Bank Agribusiness, observed, "US-China soybean trade appears to be running out of steam with that growing supply pressure out of South America ever present."
Broader Market Context
The decline in soybean futures reflects broader trends in global agricultural markets, where supply factors often outweigh short-term trade optimism. With Brazil's harvest advancing and expectations of a record crop, the market faces increasing pressure, which could influence future price movements and trade decisions. This scenario underscores the interconnected nature of international commodity markets, where geopolitical comments and harvest progress can swiftly impact prices.
