Soybean Bulletin N°4

As we can see in this graph that spans over the last week, the price of the soybean has risen quite a bit. Going from $9.10 and reach $9.20, all while experiencing a sharp dip early in the week. It was resolved almost immediately after.

Additionally, the last two days represented the highest the price has reached with this week’s peeking happening on the 12th and surpassing $9.20.

The fact that the price has gone past the 9 dollar mark displays that the market is slowly recovering from the slump it has been stuck in. If it continues to follow this trend, the effects of the Trade War will be considerably lessen.

However, we had the news that China has made his first major purchase of U.S soybean this last Wednesday 1.5 to 2.0 millions metric tons, providing some relief to U.S farmer who have struggled to sell their record-large harvest. The fact that a trade between the Chinese and the Americans happened not only brought hope for this market after months of trade war, but also has made the value of the soybean rise. Since it means that there is future with these nations trading in soybean, the price naturally went up to reflect the fact that these actors will finally make a decent margin.

Almost two weeks before the end of the year we can see always the same pattern regarding the forward curve of the soybean. However, we can see that there is a slight inverse position beginning at the end of July 2020. This inverse refers to the phenomena that we already describe a few weeks ago (seasonal pattern). Same pattern forecasting for July 2019.

In this graph we can clearly see the impact of the trade war on the Brazilian soybean exports, where, the previous years we can see that the curve is following the same pattern (again due to the seasonal pattern), so it is decreasing in November but with the trade war and China who was asking always for more soybean, Brazilian keep supplying ,for a longer period, China in order to respond to this huge demand.

https://www.cnbc.com/2018/12/12/reuters-america-grains-soybean-prices-ease-after-2-days-of-gains-chinese-buying-curbs-losses.html
https://www.farmfutures.com/story-weekly-soybean-review-0-30767
http://marketqview.com/forwardcurvechart.php?ID=74&TYPE=Price
https://www.ig.com/en-ch/news-and-trade-ideas/commodities-news/us-soybean-farmers-win-big-from-us-china-trade-war-truce-181213
https://markets.businessinsider.com/commodities/soybeans-price

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