The Soybean November Futures on CBOT maintained its bullish trend and was trading at USD 10.50/bu and is likely to test the USD 11/bu mark.
The reason behind this is the increased exports of Soybean from the US to China.
Soybean comprises more than half the value of US agricultural exports to China every year.
The exports in the USA for Soybean have been on a continuous high because of Chinese demand in the 2020-21 marketing year (September-August).
Fulfilling the Phase1 trade deal commitment to buy $200 Billion worth of US goods, including agriculture products of $80 billion between January 2020 to December 2021.
The high demand is also the result of strong hog Herd recovery in China.
The USDA reported that the soybean exports in the US, inspections were at 6.6 million MT compared to 4.2 million MT a year ago, and over half of the shipments were destined for China.
China is expected to buy more than 43 Million MT of Soybean in 2020, implying the record-breaking exports of Soybean in the US to China in the coming months.
While according to what USDA stated in September, China’s Soybean imports in 2020-21 marketing years, which run from October to September, are forecasted to touch an all-time-high with a volume of 99 million Mt.
On the other hand, Brazilian Soybean plantation is struggling with dry weather across the country.
The delay in a plantation will directly affect the output in Brazil that will be advantageous to US soybean farmers.
By the end of January, US soybean farmers would sell most of the stocks, so a poor Brazilian harvest implies a tight supply and high demand for US soybeans in the first quarter of 2021.
Thus, most likely, in the coming future, the price spike is visible in the US soybean market.