Soybean price benefits from possible US supply cuts and robust Chinese demand

The soybean price is profiting from the expectation that the US Department of Agriculture (USDA) will downwardly revise its crop and stocks estimates in the US. 

The USDA will be publishing new supply and demand estimates for key agriculturals tomorrow. The latest US export figures lent additional buoyancy. Although competition from Brazil looks set to remain high, not least because of the weak Brazilian real, US soybean exports should also benefit from the still growing demand from China, says Commerzbank. 

The Chinese customs authorities reported 9.5 million tons of soybean imports for July - the highest figure ever. China had imported 8.1 million tons in June and 7.5 million tons in July 2014. The Chinese analyst firm CNGOIC estimates total imports for 2014/15 at 76 million tons (+8% year-on-year) and expects a further small increase in 2015/16. 

Whereas, US exporters have already concluded sizeable purchase orders with China for soybeans from the 2015/16 crop. Now hot and dry weather is also forecast for the US growing areas, which could cause new problems for the growing plants. This is also driving up the corn price, especially since the poor prospects for the European corn crop are looking increasingly certain. The French Ministry of Agriculture expects a 28% lower crop in France than last year's record level because of acreage and yields, while the German Farmers' Cooperative (DRV) expects the crop to be down 10%, notes Commerzbank.